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Daily News and Leader : 

" It is an important controversial work, representative of many 
new and far from negligible tendencies in labour and other 
advanced circles." 

Atheneeum : 

"The author deals with a variety of topics, among which may 
be mentioned the Mediaeval Guild System, large organization?, 
the division of labour, machinery and industry, the tyranny of 
the middleman, the problem of his elimination, and the 
decentralization of industry." 

The Scotsman : 

" While the papers move over eminently controversial ground, 
they are freshly reasoned and suggestive." 

Sheffield Independent: 

" There are ideas in this book worth more than a king's 

Church Times : 

" The Guild Socialist Movement has its many exponents, but 
Mr. Penty contrives at once to be exponent and critic. . . . 
There are signs in plenty that Guild Socialism is the next 
popular social doctrine with which we have to reckon." 

Mr. G. K. Chesterton in the " New Witness " : 

"We wish some of the honest elements roughly covered by 
the National Party would read such a book as Mr. A. J. 
Penty's 'Old Worlds for New' ; and they might not talk so 
excitedly or at least so exclusively about Maximum Production. 
. . . Even the few short words of Mr. Penty's title contains a 
wide challenge to the progress of the modern world ; they are 
not only a parody on Mr. Wells but a very valid comment on 

The Herald : 

" The book should be read by all who are anxious about 
altering the present conditions. It has much of permanent 
value, and it is provoking and stimulating. It is a terrible 
bore to read a book with which you agree in every detail. 
You usually go to sleep. No one will do this, however, that 
reads ' Old Worlds for New.' " 

Manchester Guardian : 

"Mr. Penty has considerable claims to be regarded as the 
pioneer of Guild Socialism." 











First published in 1919 

(AH rights reserved} 


THIS book is, among other things, an attempt 
to formulate a policy for Guildsmen in the 
event of a revolution. Prophecy is always 
dangerous, and it is, of course, conceivable that 
a sudden enlightenment might descend upon the 
governing class of this country such as would 
enable them to steer safely through the social 
rapids which lie ahead. It must be confessed, 
however, that such a miracle is highly improbable, 
considering that they do not apparently possess 
sufficient understanding to retain the loyalty of 
such a naturally conservative body of men as 
the police. Prudence, therefore, suggests the 
wisdom of accepting revolution as inevitable, 
and of shaping Guild policy in the light of it, in 
order that we may not be taken by surprise. For 
revolution is at the same time a great oppor- 
tunity and a great danger. If it should come 


upon us while we are unprepared, it is almost 
a certainty we should drift into anarchy. On 
the other hand, if anticipated, it might be used 
for the purposes of reconstruction. 

The circumstance that, owing to the excesses 
of the Bolshevik regime in Russia, the idea ot 
revolution is no longer popular in this country 
does not affect the position one iota. For revo- 
lutions are not definite political acts which owe 
their origin to a more or less temporary mood of 
the people, but are forced upon people by the 
fact that a particular political and economic 
system has reached a deadlock. For when normal 
activities can no longer find an outlet there is 
bound to come a bursting of barriers. Such an 
impasse, I hope to show, is bound to follow the 
economic policy of the Government, which may 
be summarized in the term " Maximum pro- 
duction." It is a policy which must either issue 
in revolution or other wars, which if the public 
allow could be used to relieve the pressure of the 
markets by the creation of a demand for arma- 
ments. It has been said that Governments are 
never overthrown, but that they commit suicide, 
' and, franklv confessed, our Government seems 


impelled by a kind of fate towards such an 

As the assumption underlying my arguments is 
that Germany will not repay our War Loan, it 
is necessary to point out that even if she were 
made to pay, the crisis would not be averted. 
In this event we should have to provide her with 
work, and this would react to increase unemploy- 
ment in this country. I wish it were otherwise, 
for justice demands that Germany should be 
made to suffer ; but I cannot overlook the fact 
that its economic reaction upon ourselves would 
be as unfavourable as the introduction of slaves 
was to the freemen of the Roman Empire. 

It remains for me to thank the Editor of the 
New Age for permission to reprint the two con- 
cluding chapters. 

A. J. P. 

September 1918 



PREFACE. . . . . .5 



MANAGEMENT . . . . 2 9 



VI. THE CLASS WAR . . . . -77 



IN spite of the repeated assurances of Cabinet 
Ministers and others that things after the war 
are going to be very different from what they 
were before, there is little either in their words 
or actions to suggest that they have any idea 
of what the forthcoming changes are likely to 
be. Though they talk a great deal about recon- 
struction, and have set up a Ministry of Recon- 
struction to elaborate plans for our guidance 
in the future, it becomes more evident every day 
that it is readjustment rather than reconstruction 
that engages their attention There is nothing 
either in the general principles laid down for 
the guidance of the Committees set up by the 
Ministry, 1 or in such of their reports as have already 

1 In introducing the Bill for the establishment of a 
Ministry of Reconstruction (July 27, 1917) the Home 



come to hand, to suggest that the governing class 
are in any way conscious of the need of recon- 
struction. On the contrary, all the reports agree 
in taking existing society in its main essentials 
for granted as a thing of permanence and stability, 
little suspecting the real peril that confronts us 
and seeking only to effect such detailed adjust- 
ments as they suppose are necessary to enable 
society to recover from the shock and dislocations 
occasioned by the war. One of the Committees 
only that concerned with the Labour Unrest- 
shows any sign of alarm, while even here there 
is little or no. suspicion that the trouble is irre- 
movable so long as industrialism exists. On the 
contrary, the trouble is regarded merely as a form 
of distemper to be remedied by the balm and 
plaster of the Whit ley Report. 

While making this general comment on the work 
of the Ministry, I must not be interpreted as 
deprecating entirely the work of the Committees. 
The problems of demobilization and the supply 
and distribution of raw materials are problems 
of fundamental importance, though they partake 

Secretary (Sir George Cave) explained that it would be 
concerned with 

1. The restoration of normal conditions in connection 
with commerce and industry and the development of 
trade in the light of the experience gained by the war ; 

2. The restoration of the normal rights of persons 
affected by war conditions and improvement in conditions 
also suggested by the circumstances of the war. 


of the nature of readjustment rather than of 
reconstruction. However much our eyes are fixed 
on the future, however much we may be per- 
suaded that the only way to avoid catastrophe 
is finally to take such measures to strengthen 
the base of society as are involved in a return 
to first principles, the fact remains that we must 
live from day to day during the period of transition. 
And in order that we may so live, in order that 
the economic reaction of the war may not pre- 
cipitate anarchy, society as it exists to-day must 
be propped up. To such an extent the work of 
the Committees is valuable, and to such an extent 
the various systems of control which are being 
introduced into so many departments of produc- 
tion and distribution are to be approved, even 
though they do involve bureaucratic methods of 
administration. If the temporary nature of these 
arrangements be admitted, then no harm can 
come of them. The danger is that these props, 
instead of being regarded as scaffolding necessary 
to the rebuilding of society, should be mistaken 
for permanent structural arrangements, for they 
touch no vital social issue. Though at the 
moment they put a boundary to the growth of 
anarchy, they do not seek to remove its cause, 
and no scheme which does not seek first and 
foremost to remove the cause of social anarchy is 
worthy of the name of reconstruction. 
That readjustment rather than reconstruction 


was the aim of the Ministry is apparent not only 
from the terms of reference to the Committees, 
but from their manner of setting to work. Had 
reconstruction been their aim, they would not 
immediately have set up a number of Committees 
to deal with the various aspects of the problem 
presented, but would have sought first to estab- 
lish some general unanimity of opinion as to its 
cause. It was, I suppose, because they regarded 
the war as a colossal accident rather than as 
the goal towards which industrialism inevitably 
tended that they made no such effort. And 
this is where they went astray. If the war were 
entirely due to the personal ambition of the 
Kaiser and the lust for conquest of the Pan- 
Germans, then there would be no more to be 
said. But if on inquiry we find there to be 
causes much more fundamental and intimately 
connected with the economic expansion to which 
industrialism had committed all the nations of 
the West, the situation wears a very different 
complexion. For it will then be seen that re- 
adjustment is not only insufficient to meet the 
perfectly legitimate demands of labour, but can- 
not even save the governing class itself from 
complete annihilation in the near future. 

In such circumstances it becomes apparent 
that if a scheme of reconstruction is to be for- 
mulated which shall be in relation to the facts 
of the case, we must make our starting-point 


an inquiry into the causes of the war, and in 
this connection it will be convenient to begin 
with the Kaiser and his personal responsibility. 
Evidence seems to point to the fact that though 
the Kaiser's arrogant and bombastic spirit was 
a great factor in the development of the war 
spirit in Germany, yet at the last moment he was 
reluctant to sign the declaration of war. The 
Kaiser is evidently a weak man, and had doubt- 
less to screw his courage up to take the final 
step, as is evidenced by the testimony of Dr. 
Muhlon, formerly a director of Krupps, who 
has told the world the story of how early in July 
1914 the Kaiser informed Herr Krupp von Bohlen 
that he would declare war as soon as Russia 
mobilized, adding " and this time the people 
would see that he would not turn back." 

That is conclusive. But there is a question 
arising out of this. Why did the Kaiser say 
" this time " ? It had reference to the Agadir 
crisis of 1911, when the Kaiser came to an agree- 
ment with France over matters in dispute in 
Morocco without having occasion to resort to 
war. This pacific act of the Kaiser did not please 
the Pan-Germans, who denounced him in the 
Berlin Press as a coward and a traitor, and so, 
being a weak man, he yielded to their clamour. 
But why did the Pan-Germans desire war ? 

Prince Lichnowsky has told us that when the 
British Government showed the utmost readiness 


to meet the wishes of Germany in its desire for 
colonial expansion and a treaty denning the 
respective spheres of influence of the two Powers 
had been arranged, the German Government 
refused to sign it upon the only terms on which 
Sir Edward Grey would become a party to it 
namely, that it should be given publicity. The 
answer is, of course, that as the Pan-Germans 
desired war under all circumstances and deter- 
mined that nothing should stand in its way, they 
deprecated the publication of a treaty which 
would, have knocked the bottom out of their 
propaganda. Had the treaty been published, it 
would have been impossible publicly to maintain 
the theory that Germany was surrounded by a 
world of enemies, cut off from any peaceful 
expansion by the envious jealousy and the en- 
circlement policy of British statesmen. 

But why did the Pan-Germans desire war 
apparently under any circumstances ? The usual 
answer is, of course, to say that Germany was 
ambitious, desired world dominion, that she had 
become so saturated with the spirit of war and 
conquest that she had become incapable of think- 
ing politically except in the terms of war. While 
this undoubtedly was the case, it does not explain 
why war broke out in 1914 instead of before, 
for such a spirit had been present in Germany 
since 1871. The reason is, I think, to be found 
in the economic condition at which Germany 


had then arrived. The financial strain in Germany 
in the three or four years preceding the war had 
become so terrible that it is conceivable that 
the war was as much caused by the desire for 
relief from such trying circumstances as by the 
warlike proclivities of the German ruling class. 
German trade had been built up upon a highly 
organized system of credit ; and as -that system 
showed signs of breaking down, German states- 
men and financiers apparently had come to the 
conclusion that the only way to save the country 
from financial disaster was to secure the huge 
indemnities which would follow upon a successful 
war. That is the reason, I believe, why Germany 
refused to sign the treaty with Great Britain. 
It was because its statesmen felt that while it 
would make war impossible, it would not solve 
the economic problem with which Germany was 
confronted in 1914. 

Before the outbreak of the war the joint-stock 
system of banking in Germany was in a very 
rotten condition. Germany was trading upon a 
broadly extended system of credit, controlled 
through the Reichsbank by the Government. 
Under the Reichsbank flourished a system of 
four hundred and twenty-one joint-stock banks. 
In February 1914 the ninety-one principal joint- 
stock banks had owing to them from various 
debtors 6,068,000,000 marks, while their indebted- 
ness was 8,600,000,000 marks, or in other words, 



they were insolvent a fact which is not sur- 
prising when we learn the highly speculative 
nature of the enterprises which they were accus- 
tomed to finance. The stability hitherto of the 
English banks rests on the fact that they can 
only invest in gilt-edged securities. But the 
German banks would apparently finance any- 
thing, no matter how speculative. Many of them 
had been heavily engaged in promoting doubtful 
ventures at home and abroad, such as the building 
of railways in Russia, Asia Minor and South 
America, while in order to encourage German 
export trade the}' were accustomed to grant long 
credits to foreign customers without near prospects 
of payment. It was by such means that Germany 
had hoped to secure the commercial hegemony 
of the world. But she had overreached herself. 
The system was clearly breaking down. 

It will be unnecessary for me to go deeply 
into this matter, but a moment or two spent 
over the greatest of the joint-stock banks the 
Deutschebank will be worth while. " On paper 
this limited company, which must not be mis- 
taken for the Imperial State Bank, is an imposing 
institution. Its securities and reserves amount 
to 425,000,000 marks, or 21,000,000, of which 
250,000,000 marks are capital and 175,000,000 
reserve, figures which will compare reasonably 
well with one or other of the smaller joint-stock 
banks of this country or of France. But where 


the English joint-stock banks or the Credit* 
Lyonnais, let us say, are largely institutions of 
deposit, doing only very conservative financial 
business, the Deutschebank, which has lately 
absorbed the Bergisch-Marckischebank, employs 
the greater part of its capital and its resources 
in speculations of a very doubtful type, or definitely 
and absolutely employs the deposits entrusted to 
it for political ends or the extension of German 
interests. In Turkey, for instance, the Deutsche- 
bank has employed itself in the building of 
railways, in the farming of the octrois ; in Berlin 
it has attempted to found a petroleum monopoly 
under the control of the Government, and it has- 
advanced more than 100,000,000 marks for the 
purpose of saving the Fuersten-Conzern. 

" This Princes-Concern was an immense syndi- 
cate of princes and courtiers who were determined 
to obtain their share of the industrial development 
of Germany. They built hotels, factories, immense 
shops, where they traded in every possible article 
of commerce ; they speculated in building land ; 
and last year (1914) the whole concern came 
to the ground with an immense crash, threaten- 
ing with absolute ruin several of the princely 
houses 6f Germany. That the Deutschebank 
should have tried to come to the rescue of this 
concern was nothing more or less than dishonesty 
to its depositors, or, if that is too strong a state- 
ment, it is exact to say that at the date of the 


outbreak of the war the Deutschebank, in spite 
of its advance of 100,000,000 marks, was very 
far from having established the Fuersten-Conzern 
on anything like a satisfactory basis." l 

Corroborative testimony to the economic depres- 
sion which had overtaken Germany prior to the 
war is to be found in the Reports of H.B.M.'s 
Consular Agents in Germany. Reading them 
makes it fairly apparent that by the end of 1912 
the German industrial system had reached its limit 
of expansion, and that the competition of French, 
Japanese, English, and Scotch manufacturers 
was either closing markets to the Germans, or 
was actually making inroads in the German home 
trade, and it becomes evident that the German 
financial system, built on an inverted pyramid 
of credit, could not for long bear the strain of 
adverse conditions. Germany was committed to 
a policy of indefinite industrial expansion, and 
signs were not wanting that that expansion had 
reached its limit. Professor Hauser 2 tells us 

1 The quotation is from When Blood is their Argument t by 
Ford Maddox Hueffer (Hodder & Stoughton), which in 
spite of its gory title is one of the most interesting books 
I have read on pre-war conditions in Germany. Corrobor- 
ative testimony as to the rotten state of the joint-stock 
banks is to be found in Professor J. Laurence Laughlin's 
Credit of the Nations (Scribners, New York), to which I 
am also indebted. 

4 Germany's Commercial Grip of the World, by Professor 
Hauser of Dijon (Eveleigh Nash). 

According to Messrs. Farrow and Crotch in the space 


in this connection that the ratio of productivity, 
due to never-slackening energy, technique and 
scientific development, was before the war far 
outstripping the ratio of demand. Production 
was no longer controlled by demand, but by 
plant. What the Americans call overhead ex- 
penses had increased to such an enormous extent 
that no furnace could be damped down and no 
machine stopped, or the overhead expenses would 
eat up the profits, and the whole industrial 
organization come crashing down, bringing with 
it national bankruptcy. In other words, the 
commercial history of the German Empire was 
one of enormous artificial expansion obtained 
not infrequently by cutting prices to such an 
extent that there were no available profits when 
the expansions were secured. Since the opening 
years of the present century the whole financial 
position of Germany has, in fact, been one of 
long anxieties, qualified by short periods of hectic 

But, it will be said, if the German economic 

of liftecn years Germany quadrupled her output, and in 
consequence a day came when all the world that would 
take German-made goods was choked to the lips. Economic 
difficulties began to make themselves felt in Germany, 
and then the Prussian doctrine of force spread with 
alarming rapidity. War was decided upon for the purpose 
of relieving the pressure of competition by forcing goods 
upon other markets (The Coming Trade War, by Thomas 
Farrow and Walter Crotch: Chapman & Hall, 2S. 6d.). 


system was really breaking down before the war, 
how is it that she has been able to finance the 
war for four years ? For if such had been the 
case, would not the strain of the war have broken 
it down long ago ? 

The answer is that though in the long run the 
continuance of war tends to wreck every economic 
system, its immediate effects may be otherwise, 
inasmuch as the exigencies of war can be used 
by an all-powerful Government to perpetuate a 
financial system which is moving towards bank- 
ruptcy by changing temporarily the basis on which 
it rests. Let me explain how this works. 

It will not be disputed that under normal 
peace conditions every financial system rests 
upon confidence. The maintenance of this confi- 
dence in these days rests upon an ability to make 
profits, for it is only by making profits that 
interest on loans and other financial obligations 
can be met. Should the pressure of competition 
become so severe that the margin of profit is 
reduced beyond the point at which obligations 
can be met, confidence goes, and if the great 
majority of people in a community are in these 
difficult straits economic stagnation results. Such 
a state of things might exist in a society in which 
a small minority of the community was very 
wealthy. Economic stagnation in such circum- 
stances would not mean that there was not wealth 
in a country, but that the possessors of wealth 


withhold their money from circulation because 
they cannot see a return for their capital. The 
evidence I have given appears to show that some 
such state of financial stagnation had overtaken 
Germany in the two years preceding the war. 
Competition had become so keen and profits so 
reduced that confidence had been largely destroyed, 
and money withdrawn from circulation. But 
once war was declared the system began to work 
again, because finance rested no longer on confi- 
dence but on force. In other words, war intro- 
duced a change in financial operations to the 
extent that confidence came to rest no longer 
upon personal solvency, but upon Government 
solvency, which in turn rested upon faith in 
German arms to secure huge war indemnities 
at the conclusion of peace. Realizing the root 
trouble in German finance, namely, small profits 
which disposed the possessors of wealth to with- 
hold money from circulation, I do not see how 
war indemnities could provide a remedy. But 
that is by the way. The important thing was 
the German people thought so, and that set the 
financial machine in motion again. 

Enjoying this illusion, the possessors of wealth, 
who in peace times withheld their money from 
circulation because they could see no return for 
it, lent it to the Government when it declared 
war, partly out of fear, lest if they did not support 
the Government their country might be invaded 


or they might be compelled to acquiesce in an 
unfavourable peace, but primarily because the 
Government promised them interest on their 
loans. Further, under the plea of urgency to 
which the war gave justification, the credit of 
the German subject was propped up by the 
Government, which, acting through the Reichs- 
bank, put a value by fiat on securities which are 
now unsaleable, and can only have value on the 
hypothesis of a German victory : values on 
German business concerns abroad sequestrated 
and possibly to be confiscated, values of conces- 
sions that may never be returned to Germany, 
values of export houses that may never be able 
to regain their markets, values of ships seized 
or sunk, etc. By placing a credit value on such 
securities, the Government could borrow money. 
The expenditure of these loans by the Government 
put money into circulation, which the German 
Government borrowed again from the people 
into whose hands it had passed, paying the interest 
out of further borrowing. This process could be 
continued so long as the belief persisted that the 
country would be ultimately victorious, and it 
took a long time to destroy this belief, for by 
the exercise of arbitrary power the German 
Government had managed to merge with its 
shaky structure of public credit the whole 
structure of private credit as well. The limit is 
only reached when the accumulations of interest 


to be paid cannot be met out of further 

It will be with the return of peace that the 
real troubles will begin. This will be not merely 
because of the political and financial complications 
which will arise in every belligerent country over 
the repayment of their war loans, and the 
problems of demobilization and unemployment, 
but because the economic lesson which the war 
should have taught has not been heeded. The 
war is still regarded by most people as a colossal 
accident, a stupendous misfortune which has 
overtaken the world. Individual thinkers here 
and there have seen its connection with indus- 
trialism, have seen that the war was precipitated 
by the fact that industrialism, at least in Germany, 
had reached its limit of expansion. But nowhere 
is there any public recognition of the fact, and 
this is where the danger lies. For it is certain 
that the whole of Western civilization was 
travelling in the same direction, and, apart from 
the war, would soon have found itself in this 
same economic cul-de-sac, from which the only 
escape is backwards. It is a paradox, but it is 
nevertheless true, that what we term expansion 
ends finally in congestion. The congestion which 
for so long followed every attempt to break the 
line in France symbolizes the congestion which has 
entered into every department of modern activity. 
Everything in modern life is congested our politics, 


our trade, our professions and cities have one 
thing in common : they are all congested. There 
is no elbow-room anywhere, and, as I have said, 
there can be but one path of escape, and that 
is backwards. 

Modern thinkers, although they will sometimes 
admit that many things in life have their limits, 
nevertheless find it difficult to believe that there 
is such a thing as a limit to economic development. 
Somehow or other jthey imagine that economic 
expansion can go on for ever, and deny absolutely 
the possibility of such a thing as an economic 
deadlock overtaking industry. I believe that a 
terrible disillusionment awaits them, for events 
very soon after the war will prove my contention 
in a way more forcible than logic unless, of 
course, in the meantime the danger is clearly 
recognized and measures are taken for meeting 
it. Judging by the trend of opinion, such a course 
seems extremely unlikely. 

Let me try to show why industrial expansion 
must eventuate in an economic deadlock. I will 
begin by defining an economic deadlock as a 
state of affairs in which the balance between 
demand and supply is so completely upset that 
only changes so drastic and fundamental as to 
amount to a revolution can by any possibility 
restore it again. What is there improbable about 
such a situation arising ? The balance has been 
upset many times during the last hundred years, 


and after a time it is true things have adjusted 
themselves again. But what reason is there to 
suppose that the balance will always be restored, 
any more than to suppose that because a man 
has recovered several times from some serious 
illness he will always be able to offer effective 
resistance ? We know that such is not the case, 
and that the constant recurrence of illness will 
so weaken a man's constitution that in the end 
he succumbs. The same holds good with respect 
to economic evils which attack the body politic. 
They undermine this and undermine that until 
finally they bring disaster. That this is not 
popularly recognized is due to the long period 
of time which elapses between the first symptoms 
and the final catastrophe. When the evil first 
appears it gives rise to alarm. People predict 
dreadful consequences, and they are right, but 
the delay seems to disprove them. Familiarity 
breeds indifference. Then apologists appear, and 
the various stages of the disease are heralded 
as signs of progress, until finally all ideas of right 
and wrong become so confused that when the 
final crisis arrives the foundations of right 
thinking have become so completely undermined 
that nothing can prevent collapse. 

Let me argue the point another way. If there 
is no limit to the possibilities of production there 
must be no limit to consumption, because the 
volume of production can only increase on the 


assumption that there is a corresponding increase 
in consumption. But is it not apparent that 
there must be a limit to the possibilities of con- 
sumption ? If by automatic machinery we could 
increase production a thousandfold the balance 
between demand and supply would be upset and 
an economic deadlock created, for it is a certainty 
we could not increase our consumption to a 
corresponding degree, except by recourse to a 
war a thousandfold more destructive than the 
present one. 

That is the answer, I think, to those people who 
agree in theory that there is a limit to consump- 
tion, but deny that we are in any way reaching 
this limit. The proof that there is such a thing 
as a limit to consumption lies in the fact that 
we are at war. We are at war to decide, among 
other things, which nation or group of nations 
shall have the right to dominate the markets 
of the world. If the limit of consumption has 
not been reached, why should there be this 
struggle, why this intensification of competition ? 
Surely it can only mean that, having reached 
this limit, we are in an economic cul-de-sac, 
that we are unable to go forward and too proud 
to go back. 



THE underlying cause of the destruction of 
the balance between demand and supply, 
which in turn has been the economic cause 
of the war and will lead us afterwards into an 
economic cul-de-sac, is the sin of avarice, which 
leads people to be for ever reinvesting their 
surplus wealth for further increase instead of 
spending it upon crafts and arts. 

This mania for it is nothing less is of quite 
modern origin. In the Middle Ages, as in the 
East to-day, it was the custom of people to spend 
or invest their wealth in beautiful things. They 
would spend their all upon fine buildings, furni- 
ture, metal-work, rugs, or jewellery. Incident- 
ally, this is why people who were poor according 
to modern standards invariably lived in a beautiful 
environment. It was natural for these people 
to spend their wealth in this way because when 
the laws against usury were strict there was no 


other way to spend it. But with the relaxation 
of the Mediaeval laws against usury, and the rise 
of Protestantism, which sought to accommodate 
morals to the practice of the rich, a change 
gradually took place. Still, in spite of gross 
inequalities in the division of wealth, the balance 
between demand and supply was fairly main- 
tained, since, so long as hand production obtained, 
a natural boundary prevented the growing tendency 
of people to reinvest surplus wealth for further 
increase from developing beyond a certain 
point. But with the coming of machinery and 
the limited liability company this boundary was 
removed, and opportunities for investment pre- 
sented themselves at every turn. It was thus 
that the old idea that surplus wealth should be 
spent upon the arts first fell into disuse, and then 
was forgotten. When people build nowadays 
they no longer regard it as a means of consuming 
a surplus, but as a speculation by which they 
hope to increase their riches. This applies not 
only to building, but to pictures, which are 
bought to-day as investments. 1 

Had the governing class any grip of the economic 

1 After the Franco -German War the French saved 
themselves by putting in hand extensive building opera- 
tions, or, in other words, by spending money. The defect 
of our Housing Scheme from this point of view is that it 
is not being undertaken in order to spend money, but as 
an investment. This different spirit betrays the lack of 
insight into economic questions by the governing class. 


situation, they would have seized upon this issue 
as being the central one for themselves, and by 
diverting . surplus wealth into its proper channel 
have sought to readjust the balance between 
demand and supply. But in spite of all that has 
happened, and is happening, they seem to be 
entirely blind to the situation. They never for 
one moment reflect on the general economic 
situation, which in their minds appears to be 
entirely obscured by two issues considered by 
them of more immediate importance, namely, 
how to secure our commercial supremacy after 
the war against the competition of Germany, 
and how to repay the war loan. Being practical 
men that is, men who can never see the wood 
for the trees they concentrate on these two 
issues, disregarding entirely the wider considera- 
tions involved. Faced, apparently, by a dilemma 
and seeing no sure path of escape, they close 
their eyes to half of the 'facts of the situation 
and plunge wildly forward in a desperate bid 
for safety. How else can the advocacy of maxi- 
mum production and scientific management be 
explained ? If it is not a policy of desperation, 
what is it ? For no one could advocate it who 
has made any attempt to see the problem as a 
whole. It is a gambler's last throw with the 
dice loaded against him. 

I feel well advised in making this assertion, 
for all the facts of the situation point to this 


conclusion. The advocates of maximum produc- 
tion and scientific management make no attempt 
to think as statesmen who take all sides of a 
problem into consideration ; they do not even 
think of the class interests of capitalists, for 
maximum production can be shown to be contrary 
to their interests as a class ; they think as indi- 
vidual capitalists who interpret national problems 
in the terms of their own businesses. There can 
be no doubt about this, for it "is only by thinking 
in such terms that it is possible to make out a 
case for these proposed innovations. Their 
reasoning is arcadian in its simplicity. To repay 
the war loan and to maintain our commercial 
supremacy after the war, it is necessary to make 
more money and to produce more cheaply. These 
ends are to be attained by maximum production 
on a basis of scientific management. What 
could be simpler ? Scientific management will 
reduce the cost of production, and will therefore 
allow us to compete more successfully with 
Germany, while maximum production increases 
opportunities for the making of profits. Such a 
policy is without doubt a sound business propo- 
sition from the point of view of the individual 
capitalist who has to consider ways and means 
of holding his own in the market and meeting 
his financial obligations after the war. But it 
is not possible for many of them to adopt it 
without imperilling the stability of the whole 


social and economic system. For it has this 
defect, when considered from a national point of 
view, that it increases immeasurably the dis- 
crepancy between demand and supply. It 
trespasses further on the margin of economic 
safety. In a word, it is a proposal to take a 
short cut by sailing too near the wind, and as 
after the war the political and economic atmo- 
sphere will be charged with storms and tempests, 
the chances are that the ship of state will 

To realize the danger of this proposal it is only 
necessary to enlarge the area of the problem. 
Granted that maximum production and scientific 
management would enable our manufacturers 
to produce more cheaply and to make more 
money, would it enable them to. give more employ- 
ment ? For unemployment is going to be the 
problem of problems after the war, and a policy 
which does not make this issue its starting-point 
is no policy at all. It is an evasion of the whole 
difficulty. In comparison, how to repay the war 
loan, and how to maintain our position in the 
markets of the world are matters of quite secondary 
importance, since the whole future of our civili- 
zation depends upon our capacity to deal 
successfully with unemployment. Failure means 
not only revolution, but a relapse into anarchy 
and barbarism. 

" But," it will be said by the advocates of this 


insane policy, " making good the shortage which 
has been occasioned by the war, the revival of 
agriculture, protection for home markets, and 
bounties for key industries will provide work 
for some time to come, and so there is no imme- 
diate danger. Unemployment there probably will 
be, but it will not be of such dimensions as to 
imperil the stability of society." To which I 
answer that though by such means we may put 
off the evil day, they leave the central problem 
essentially unaltered. The reason for this is to 
be found by again enlarging its area. For the 
problem is really an international one. All , the 
other belligerent nations will have to face the 
same problems as ourselves. If we adopt maximum 
production, they in turn will be compelled to 
adopt it in self-defence, while in so far as by 
means of Protection and bounties we encourage 
home industries at the expense of foreign ones, 
the result will be a decreased purchasing power 
in other nations, which in turn will deprive us 
of markets for our surplus goods. On this issue 
the Free Trade argument is perfectly sound. I 
am in favour of Protection for other reasons 
for military and political reasons, and because 
apart from it the regulation of our internal 
economic arrangements will remain impossible. 
But the idea that by means of Protection our 
volume of trade can be increased appears to me 
to be altogether illusory. 


I said that if we adopt maximum production 
other nations will be compelled to do the same 
in self-defence. Where shall we be then ? The 
competition will be more severe than ever. 
Profits will decline, and how is that going to help 
us to repay the war loan ? So that finally we 
see that maximum production defeats its own 
ends, even from the point of view of its promoters. 
Sooner or later the truth will have to be faced 
(and the sooner the better) that the only way 
to repay the war loan is to effect such a radical 
revolution in our methods of taxation as will 
enable the wealthy class to liquidate the debt 
among themselves. All efforts of the wealthy to 
evade their responsibilities by attempts to shift 
the burden on to the shoulders of other classes 
must in the nature of things not only fail in the 
end, but will be accompanied by a measure of 
retribution that they will not easily forget. The 
new world, it is true, is going to be different from 
the old, but it rests with the wealthy class whether 
the transition is going to be one of orderly pro- 
gression or revolution. For if it be true, as I 
have already shown, that industrialism before 
the war had reached its limit of expansion, then 
it follows that the reorganization of industry on 
a basis of scientific management must be accom- 
panied by the growth of a permanently unemployed 
class a class which tends gradually to increase. 
For, as the whole underlying basis of modern 


industry is one of expansion, it follows that once 
the limit is reached, contraction must take its 
place. Here again there will be no stopping the 
tendency, once it gets fairly in motion, apart 
from a return to those first principles of social 
organization which we abandoned four hundred 
years ago. 

While maximum production is calculated to 
make trouble for us in the markets, scientific 
management will make trouble for us in the 
workshop. It is not a policy calculated to pour 
oil on troubled waters, but rather to add fuel to 
the flames of discontent. For the moment appear- 
ances are to the contrary. Labour Ministers 
have been brought into line, and are doing their 
best to induce the workers to scrap their old 
prejudices in favour of limitation of output, while 
holding out promises of increased earnings if 
they will join hands with the employers in an 
effort to increase the volume of production by 
accepting scientific management. But promises 
are one thing and fulfilment is another. The 
workers' instinct in favour of limiting output is 
not altogether a prejudice, though it may appear 
as such to capitalists and others. On the con- 
trary, it is born of experience, and an experience 
not to be gainsaid. The workers know that such 
a policy keeps them employed, whereas when 
more than the average is produced the markets 
are glutted and unemployment results. This has 


been the experience of the maximum production 
policy in America, where a factory will work at 
full pressure for several months arid then close 
down until its surplus stock can be disposed of. 
It is experiences of this kind which have led the 
American Labour Unions to adopt an attitude of un- 
compromising hostility towards scientific manage- 
ment. It may be possible for our Labour Ministers 
to persuade the workers to give it a trial. But 
they will not acquiesce for long, for the old 
difficulties will soon reappear, and then the old 
troubles will begin again. 

But there are other and deeper reasons for the 
hostility of labour. Scientific management irri- 
tates the workers. They dislike the kind of 
supervision which it entails. Labour is essentially 
human and does not care about being scientifically 
managed. Its idea is to manage industry some 
day itself, and so it naturally looks with suspicion 
upon a system which proposes to deprive the 
worker of what remains of his skill and to transfer 
all labour knowledge to the management. For 
scientific management is a good scavenger. It 
is out for every scrap of trade knowledge it can 
get. Following the machine, it proposes to clean 
up the last vestiges of craftsmanship, and to put 
the ship-shape touches to modern industry, 
" Each one of these ' scientific ' propositions is 
perfectly familiar to the workman in spite of the 
rather naive assurance of the efficiency engineers 


that they are new. He has known them in 
slightly different guise for a century past. The 
new thing is the proposition to develop what has 
been in the past the tricks of the trade into a 
principle of production. Scientific management 
logically follows, and completes the factory 
process." l 

It is important to note that it completes the 
factory process. As such it is a cul-de-sac. Mr. 
J. A. Hobson, in an article on scientific manage- 
ment, brings home the truth of that assertion. 
" Indeed," he says, " were the full rigour of scien- 
tific management to be applied throughout the 
staple industries, not only would the human costs 
of labour appear to be enhanced, but progress 
in the industrial arts itself would probably be 
damaged. For the whole strain of progress 
would be thrown upon the scientific manager 
and the consulting psychologist. The large assist- 
ance given to technical intervention by the observa- 
tion and experiments of intelligent workmen, the 
constant flow of suggestion for detailed improve- 
ments would cease. The elements of creative 
work still surviving in most creative labour would 
disappear. On the one hand there would be 
small bodies of efficient taskmasters carefully 
administering the orders of expert managers ; 
on the other, large masses of physically efficient 

1 American Labor Unions, by Helen Marot (Henry 
Holt & Co., New York}. 


but mentally inert executive machines. Though 
the productivity of existing industrial processes 
might be greatly increased by this economy, the 
future of industrial progress might be imperilled. 
For not only would the arts of invention and 
improvement be confined to the few, but the 
mechanization of the great mass of workmen 
would render them less capable of adapting their 
labour to any other method than that to which 
they had been drilled. Again, such automatism 
in the workers would react injuriously upon their 
character as consumers, damaging their capacity 
to get full human gain out of any higher remuner- 
ation that they might obtain. It would also 
injure them as citizens, disabling them from 
taking an intelligent part in the arts of political 
self - government. For industrial servitude is 
inimical to political liberty. It would become 
more difficult than now for a majority of men, 
accustomed in their workday to mechanical 
obedience, to stand up in their capacity as citizens 
against their industrial rulers when, as often 
happens, upon critical occasions, political interests 
correspond with economic cleavages." I 

There is one comment to make on this quotation. 
Mr. Hobson's reference to " large masses of physi- 
cally efficient executive machines " does not 
receive medical support. American Medicine 
comments editorially on the result to labour of 
1 J. A. Hobson, Sociological Review, July 1913. 


efficiency schemes designed to relieve it of 
" wasted " effort. 

" Working along with his partner the efficiency 
engineer, the speeder-up has managed to obtain 
from the factory worker a larger output in the 
same period of time. This is done by eliminating 
the so-called superfluous motions of the arms 
and fingers i.e. those which do not contribute 
directly to the fashioning of the article under 
process of manufacture. . . . The movements 
thought to be superfluous simply represent 
Nature's attempt to rest the strained and tired 
muscles. Whenever the muscles of the arms 
and fingers, or of any part of the body for that 
matter, undertake to do a definite piece of work, 
it is physiologically imperative that they do not 
accomplish it by the shortest mathematical route. 
A rigid to-and-fro movement is possible only to 
machinery ; muscles necessarily move in curves, 
and that is why grace is characteristic of muscular 
movement and is absent from a machine. The 
more finished the technique of a workman and 
the greater his strength, the more graceful are 
his movements, and, what is more important in 
this connection, vice versa. A certain flourish, 
superfluous only to the untrained eye, is absolutely 
characteristic to the efficient workman's motions. 

" Speeding-up eliminates grace and the curved 
movements of physiological repose, and thus 
induces an irresistible fatigue, first in small 


muscles, second in the trunk, ultimately in the 
brain and nervous system. The early result is 
a fagged and spiritless worker of the very sort 
that the speeder-up's partner the efficiency 
engineer will be anxious to replace by a younger 
and fresher candidate, who, in his turn, will soon 
follow his' predecessor if the same relentless 
process is enforced. 

" It will always be necessary to consider 
workers as human beings, and charity and moder- 
ation in the exaction of results will usually be 
found the part of wisdom, as representing a wise 
economy of resources. This scientific charity, 
however, is something quite apart from the moral 
effect on the personnel of due recognition of 
their long service, and of loyalty which is likely 
to accompany it." r 

So after all it appears that the workers' prejudice 
is not altogether without some foundation, and 
as it so happens that the workers are masters of 
the position to the extent that they must be 
willing to co-operate with the efficiency engineer 
if a scheme is to be evolved suitable to a particular 
trade, the pill has to be gilded if they are to 
swallow it. This is the secret of the bonus system 
and promises of high wages, as it is doubtless the 
secret of the Whitley scheme. For, according 
to Mr. F. W. Taylor, its pioneer, scientific manage- 

1 American Medicine, April 1913, quotation from 
American Labor Unions, by Helen Marot. 


ment requires of industry a new ethical standard, 
and involves a complete revolution both on the 
part of the management and the men. But if 
I am not mistaken, the anxiety of our new 
industrialists to introduce this new ethical stan- 
dard is a case of crying peace, peace, when 
there is no peace. For industrialism has exhibited 
disruptive tendencies since the day of its birth 
disruptive tendencies which have hitherto only 
been held in check by the military organization. 
But for the military, industrialism could never 
have been introduced. The Luddite anti-machinery 
riots bear witness to the opposition that had to 
be overcome, while every stage of its development 
has been punctuated by the military on whose 
assistance capitalists have been able to rely in 
their warfare with the workers for the suppression 
of riots which developed out of strikes. So there 
is a sense in which it may be affirmed that indus- 
trialism and militarism rest to-day on a common 
foundation. The war, as I have already shown, 
was precipitated by the economic crisis which 
had overtaken industrialism in Germany. The 
idea that militarism could be abolished and 
industrialism retained is quite illusory. For if 
militarism went, a check would be removed which 
so far has prevented industrialism from bearing 
its bitterest fruit. The workers would rise against 
its tyranny if they felt that they no longer need 
submit, and it looks as if scientific management 


would bring the trouble to an issue. Under 
the new dispensation it is to play the part of 
agent provocateur until the workers rise and rebel. 1 
Meanwhile, there is some consolation in the 
fact that as every industrialized nation after the 
war will be confronted by the same problems, 
all the nations involved in the struggle are learning 
the same lesson at the same time. All of them 
will discover that industrialism is a cul-de-sac 
from which the only escape is backwards. There 
is reason therefore to hope that beneath the 
fierce and cruel oppositions of the hour a profound 
principle of unity is at work, and that when 
after the war the dream of a glorified industrialism 
is dispelled, common action may be taken to put 
an end not only to militarism, but also to the 
industrial warfare of which it is the bitter fruit. 

1 The relations of industrialism and militarism are 
discussed in other terms in Mr. L. P. Jack's book From 
ih& Human End. 


A CONSIDERATION of the issues raised in 
the foregoing chapters points to the con- 
clusion that capitalism is about to commit 
suicide. Having reared the industrial system upon 
a basis of social and economic injustice, capitalists 
are driven from one desperate expedient to another 
in a vain effort to attain economic stability. But 
these efforts will avail nothing, for the crisis 
ahead cannot be met by men whose primary 
interest is in maintaining the capitalist system. 
Hence their dilemma. 

It is because industrialism is finally based upon 
social injustice that the balance between demand 
and supply has been upset For this phenomenon 
is but the reflection in the economic sphere of the 
destruction of the balance of power in the body 
politic which followed the destruction of the 
Guilds at the time of the Reformation, when the 
people lost control of those things which immedi- 
ately affected their lives Uncontrolled by Guilds, 


industry could no longer be related to human needs. 
It became subject to mass movements entirely 
incapable of control by any human agency whatso- 
ever, whether collective or individual, and it has 
gone on floundering ever since, while Parliament, 
which came to usurp all power in the State, has 
in turn been drawn into the sweep of these invisible 

In one sense it is true to say that the present 
state of things marks a condition into which 
civilization has drifted, and is the result of no 
policy, no forethought, no design. And yet in 
another sense this is not true. The modern State 
has become what it is because for the last four 
hundred years the governing class have sought 
to perpetuate the injustices established by the 
Reformation. It was because the governing class 
was living on the plunder of the monasteries and 
the Guilds that they were in the past led to blacken 
Catholicism, to condone usury, to misrepresent 
the Guilds and to give support to false political 
and economic theories. They did this because 
in no other way could they justify themselves. 
While they denied the people the right to manage 
their own affairs through the agency of Guilds 
the only institution through which the people are 
capable of exercising control they found that 
they themselves were unable to control the economic 
situation. When they found that their meddling 
only made matters worse, they came to drift, to 


adopt the policy of laissez-faire, which the force 
of circumstances has brought to an end, but 
which leaves them in a sad dilemma. For whereas 
things have reached such a pass that something 
must be done, they find that not only are they 
without any rational social theory to guide them 
in the task of reconstruction, but that the prejudice 
against Mediaeval society which has been created 
by lying historians in the past stands in their 
way, because it has led men to look with suspicion 
upon all normal social arrangements. In rejecting 
the Guild, political philosophers denied the chief 
corner stone of any sane political theory, and have 
in consequence been driven into error after error 
and into compromise after compromise in a vain 
endeavour to find solutions to problems which 
for minds with their perverted outlook are 

To Mediaeval social arrangements we shall 
return, not only because we shall never be able 
to regain complete control over the economic 
forces in society except through the agency of 
restored Guilds, but because it is imperative to 
return to a simpler state of society. x Further 
development along present lines can only lead to 
anarchy. For anarchy is the product of com- 
plexity. It comes about in this way : the growth 
of complexity leads to confusion, because when 
any society develops beyond a certain point the 
human mind is unable to get a grip of all the 


details necessary to its proper ordering. Con- 
fusion leads to misunderstandings and suspicions, 
and these things engender a spirit of anarchy. 
No one will deny that such a spirit is rife to-day, 
and it is difficult to avoid the conclusion that it 
is a sign that modern society is beginning to break 
up. We are certainly beginning to turn the 
corner, and once it is turned there will be no stop- 
ping until we get back to the Mediaeval basis. 
We shall travel of course by stages. But we shall 
get there eventually because we shall find no rest, 
no stability, until we reach our destination. There 
will be no stopping at any half-way house ; so 
much is certain. 

Meanwhile it is interesting to note how Mediaeval 
economic principles are insinuating themselves 
into latter-day practice as a consequence of the 
force of circumstances. We have not yet attained 
to the Mediaeval conception of a Just Price, but 
the necessity of putting a boundary to the depre- 
dations of the profiteer has revived its Mediaeval 
corollary the Fixed Price. Being a practical 
people with machinery as our god, we indignantly 
repudiate the idea that it is in the interests of 
society that machinery be controlled. Yet all 
the same machinery is being controlled in Lanca- 
shire and Yorkshire to-clay l it is true as measures 

1 The Cotton Control Board administering the cotton 
trade in Lancashire states the number of spindles each 


of war emergency consequent upon the shortage 
of cotton and wool, but it is none the less significant 
on that account ; for if the war is not to be regarded 
as a colossal accident but as something towards 
which the whole modern polity inevitably tended, 
then we may be sure that the forces at work which 
make control necessary to-day will make it neces- 
sary in the future. The cotton shortage may come 
to an end ; but Lancashire is losing its Indian 
market because of an adverse tariff, as indeed it 
is losing other markets through the growth of 
competition circumstances which bring home to 
us the fact that industrialism has reached its limit 
of expansion. Wisdom might have suggested 
years ago the desirability of regulating the output 
of cotton. For it would surely have been better 
to have introduced such regulations than to be 
for ever lowering the standard of quality in order 
to adjust the balance between demand and supply 
which the use of an ever-increasing number of 
spindles necessitated. Is it not strange that 
nothing short of a war of universal dimensions 
could induce Lancashire to face up to the situa- 
tion ? I should like to believe that wars would 
be impossible in the future, but the unwillingness 
or inability of mankind to face the simple facts 

factory may use. The operatives work a fortnight and 
then take a week's holiday for which they are paid, men 
receiving 255. and women 155. The Wool Control in 
Yorkshire proceeds along similar lines. 


of society apart from them does not leave much 
room for hope. 

The examples I have given of the tendency of 
latter-day economic practice to follow Mediaeval 
lines are interesting, but the strongest evidence 
of all in support of the hypothesis that a return 
to Mediaevalism is essential to the preservation 
of society is to be found in the success of the 
National Guild movement which proposes to trans- 
form the Trade Unions into Guilds. For there is 
historical continuity in the idea, inasmuch as the 
Trade Unions are the legitimate successors of the 
Mediaeval Guilds, not only because the issues with 
which they have concerned themselves have 
arisen as a result of the suppression of the Guilds, 
but because they acknowledge in their organization 
a corresponding principle of growth. The Unions 
to-day with their elaborate organizations exercise 
many of the functions which were formerly per- 
formed by the Guilds such as the regulation of 
wages and hours of labour, in addition to the 
more social duty of giving timely help to the sick 
and unfortunate. Like the Guilds, the Unions 
have grown from small beginnings until they now 
control whole trades. Like the Guilds also, they 
are not political creations, but voluntary organi- 
zations which have arisen spontaneously to protect 
the weaker members of society against the oppres- 
sion of the more powerful. They differ from the 
Guilds only to the extent that, not being in posses- 



sion of industry and of corresponding privileges, 
they are unable to accept responsibility for the 
quality of work done and to regulate the prices. 
The National Guild proposal therefore to trans- 
form the Trade Unions into Guilds by giving 
them a monopoly of industry is thus seen to be 
an effort to give conscious direction to a move- 
ment which hitherto has been entirely instinctive 
which is, to use Mr. Chesterton's words, " a 
return to the past by men ignorant of the past, 
like the subconscious action of some man who 
has lost his memory." l And the propaganda 
has met with a phenomenal success a success 
which I have some right to say has been out of 
all proportion to the amount of work put into it 
or the means at the disposal of its advocates, and 
which therefore can only be finally explained on 
the assumption that it voices a felt need ; that 
the balance of power in society has become so 
upset that men instinctively support the Guild 
idea as a means of restoring the equilibrium. 

It is safe to say that the Guild propaganda 
would not have been followed with the success it 
has had but for the co-operation of certain external 
happenings. In the first place there is the growing 
distrust of Parliament and centralized govern- 
ment. In the next there is the increasing sense 
of personal insecurity and loss Jof ^personal inde- 
pendence which has followed the growth of large 

1 A Short History of England, by G, K, Chesterton. 


organizations. Then there is the war and the 
Munitions Act, which gave the workers a taste of 
Collectivism and the enormous growth of bureau- 
cracy, which has brought home to many people 
the utter inadequacy of such a method for meeting 
really vital problems. In consequence almost 
everybody has come to feel that some fundamental 
change must be made, and as the road forward is 
impassable, there is no alternative but to go back. 
I am aware of course that many National Guilds- 
men would not go to such lengths. Their concern 
is with the problem of transforming the Unions 
into Guilds, which they can justify as going for- 
ward. All the same it is a step backwards of a 
very fundamental order, for it is nothing less than 
a proposal to reverse the practice and judgment 
of the last four hundred years. I say " practice 
and judgment," but I place practice first because 
I do not seriously think that the present state of 
things owes its existence to any reasoned judgment 
whatsoever. It was established first by force 
and attempted justifications were made afterwards. 
That is the history of all modern ideas. 

We may agree with the National Guildsmen 
that the first step is for the workers to take over 
the control of industry, and that in order to do 
this they must for the present accept industry 
as it actually exists. 1 But if they are not to be 

1 Something approximating to National Guilds was 
organized under the Menshevik Regime in the Russian 


involved in the catastrophe which threatens the 
modern world, they should be sufficiently frank 
with themselves to know in what direction we 
are travelling ; for there will be no time to 
discuss properly the issues involved when the 
transfer actually takes place. One funda- 
mental issue the incompatibility of democratic 
control with highly centralized organization is 
being realized, so there is nothing to fear in that 
direction. No difficulties are likely to be put 
in the way of the growth of local autonomy. The 
trouble is likely to come over the unemployed 
problem which will certainly follow the demobiliza- 
tion of the forces and the closing down of the 
munition factories in spite of the shortage which 
must be made good. National Guildsmen will 
be as powerless as capitalists to face this problem 
unless in the meantime they make up their minds 
in what direction society is travelling. 1 Socialists 

Revolution. But the good work which was then done 
w r as rendered nugatory by the action of the Bolsheviks, who, 
raising the cry that the capitalists were creeping back to 
the control of industry, urged the workers to elect to 
their Workshop and Factory Committees not those best 
qualified to administer the work, but those who were 
the exponents of Bolshevik views. It was thus the reign 
of the demagogue was inaugurated in Russia and industrial 
chaos made its appearance. It is to be hoped that we 
shall have the sense not to fall into this pitfall. 

1 Since these words were written I am pleased to say 
some unanimity of opinion is coming into existence on 
this issue. 


generally have not emancipated themselves entirely 
from Capitalist ways of thinking. Almost without 
exception they still think about finance in com- 
mercial terms, while Guildsmen have not always 
learned to think primarily in the terms of things. 
Yet Guild finance must differ as fundamentally 
from commercial finance as Guild organization 
differs from commercial organization. To make 
a long story short, Guild finance means the 
abolition of finance as we understand it. For 
finance to-day means nothing more than finding 
ways and means of using money for the purposes 
of increase, and obviously Guilds can have nothing 
to do with such a motive. It follows that in pro- 
portion as the Guild principle of fixed prices can 
be applied, opportunities for making money by 
the manipulation of exchange will tend to dis- 
appear, while in proportion as the workers come 
into the possession of industry, opportunities for 
investment will likewise come to an end. Book- 
keeping there will be, but bookkeeping is not 
what we understand by finance. From this point 
of view the primary aim of the Guild is to guard 
society against the evils of an unregulated currency 
by restricting currency to its legitimate use as 
a medium of exchange. 

The introduction of a change so fundamental 
in the conduct of industry will create a host of 
problems with which it will be necessary to deal. 
For with the change many occupations will auto- 


matically come to an end, and if society is not to 
relapse speedily into anarchy it is important that 
the situation should be intelligently anticipated. 
All who find themselves unemployed should be 
put upon free rations until such time arrives as 
they can become absorbed in the new social system. 
There is no other way of preventing bloodshed. 
Meanwhile the surplus workers should be put 
upon the land, for not only would this measure 
have the merit of immediately relieving the situa- 
tion, but the revival of agriculture would confer 
the permanent benefit of strengthening society 
at its base, while it would react to restore normal 
conditions in industry. Of course some discrimina- 
tion would need to be shown, as in the case of old 
people who would be unable to adjust themselves 
to the new conditions and should be pensioned off. 
While the revival of agriculture would relieve 
the unemployed problem, it would by no means 
solve it. Such a desideratum can only be reached 
by such a complete change in the purpose and 
scope of industry as is involved in the substitution 
of a qualitative for the present quantitative ideal 
of industry. This is a big question, and pre- 
supposes a revolution not only in our methods of 
production but in our ways of thinking, habits 
of life and personal expenditure. As I have dis- 
cussed this question and its implications at some 
length in my Old Worlds for New, 1 it will not be 
' George Allen & Unwin, Ltd. 35. 6d. net. 


necessary for me to repeat the argument I there 
used. Suffice it here only to say that such a 
change in concrete terms means the revival of 
handicraft together with a definite limitation of 
the use of machinery. That the revival of handi- 
craft would assist us in our efforts to cope with 
the unemployed problem becomes apparent when 
we realize that with a reversion to handicraft 
we should no longer be haunted by the problem 
of surplus goods which has followed in the wake 
of unregulated machine production. Anyway it 
is apparent that if men are unemployed they must 
either be provided for or left to starve. Would 
it not be wiser to employ them as handicraftsmen 
than to compel them to live on doles while being 
employed on some useless and unnecessary work ? 
Tliis issue must be faced. It cannot be evaded 
any longer, because nowadays, when there arc 
no new markets left to exploit, it will be impossible 
to put off the evil day by dumping our surplus 
products in foreign markets. 

To ordinary sane men such reasoning is con- 
clusive. Unfortunately, however, the decision 
in such matters does not rest with them to-day, 
but with the " politically educated " members of 
society that is with men whose natural instincts 
have been perverted by the training of their 
minds oja false issues in the supposed interests of 
capitalists and the status quo. That Socialists 
and Labour men generally are just as much victims 


of our false academic tradition as members of the 
governing class does not lessen but increases the 
danger, for by depriving the working class of their 
natural leaders, it is surely bringing about the rule 
of the mob. It is tragic, but still it is nevertheless 
true to say that, generally speaking, the more 
highly educated a man is to-day the more likely 
he is to be wrong. This is the secret of the power 
of the Northcliffe Press, of the Billing verdict, 
as of the impotence of our governing class. The 
feeling against leaders, rightly interpreted, is really 
a demand for leaders whose instincts are sound. 
The good men believe the wrong things. That is 
our root trouble to-dav. 


THE danger inherent in the growing dis- 
respect for all forms of authority is that 
from being a perfectly legitimate protest 
against spurious forms of authority and culture 
it may develop into a revolt against authority 
and culture in general. To the Neo-Marxian 
whose faith is absolute in the materialist inter- 
pretation of history this may seem a matter of 
no consequence. But to those who realize the 
dependence of a healthy social system on living 
traditions of culture it is a matter of some concern. 
For whereas a false culture like the academic 
one of to-day tends to separate people by dividing 
them in classes and groups and finally isolating 
them as individuals, a true culture like the great 
cultures of the past unites them by the creation 
of a common bond of sympathy and understanding 
between the various members of the community. 
The recovery of such a culture is one of our 
most urgent needs, for some such unifying principle 


is needed if society is to be reconstituted. If 
the overthrow of capitalism is not to be followed 
by anarchy, this dual nature of the social problem 
must be acknowledged. For it is apparent that 
if a change in the economic system is to be made 
permanent it will need to be accompanied and 
fortified by a change in the spirit of man. Most 
Socialist activity to-day is based upon the assump- 
tion that one will necessarily follow more or less 
automatically as a consequence of the other, and 
that all it is necessary to do is to seek to abolish 
economic insecurity under a restored Guild system 
and the materialist spirit would disappear as a 
matter of course. But such reasoning, I submit, 
is fallacious. Even granting that it could be 
proved that the social problem had its origin in 
a purely economic cause, it does not follow that 
to effect economic change in the right direction 
would automatically produce the change we 
desire on the spiritual side of life, because, as we 
are all creatures of habit, the materialist habit 
of mind would tend to persist when the cause 
which originally created it had been removed. 
What most Socialists fail to realize is that the 
material and spiritual sides of the problem must be 
attacked simultaneously if reaction is not to result. 
Otherwise it is a certainty that the one which at 
the moment is left standing would wreck the other. 
We know that a religious revival to-day would 
not effect permanent results unless it were accom- 


panied by a change in the economic system. For 
precisely the same reason a change in the economic 
system cannot be permanent unless accompanied 
by a corresponding change in the spirit of man. 
Apart from a change in the spirit of man, it is 
conceivable that a restored Guild system, instead 
of laying the basis of a happy and prosperous 
society, would, under materialist direction, degener- 
ate into a number of warring groups, in which the 
groups in an economically weak position would 
be ground down by those in a stronger one. All 
the circumstances which now so rightly shock 
the Socialist conscience would be reproduced. 
The tree would still only bear thistles, for self- 
interested human nature must ever inflict suffering 
on those that are weak. Economic change is 
therefore impotent to redeem society unless it is 
accompanied by such a change in the spirit of 
man as is tantamount to a religious awakening. 
" For," to quote de Maeztu, " men cannot unite 
immediately among one another ; they unite in 
things, in common values, in common ends." l 
The materialist philosophy of organized Socialism 
supplies no common aim capable of uniting men 
for the purposes of reconstruction ; on the contrary, 
it can only unite them for the purposes of destruc- 
tion, for the overthrow of the existing system. 
Once that is done, Socialists must split up among 

1 Authority, Liberty and Function in the Light of the 
War, by Ramiro de Maeztu (Geo. Allen & Unwin, 4$. 6d.), 


themselves, for their lives -are governed by no 
common denominator. Like the builders of Babel, 
they will be overtaken by a confusion of tongues 
for such is the inevitable end of all materialist 

The more one thinks about the social problem, 
the moie one comes to see that economic health 
in a community is dependent upon morals ; and 
the more one thinks about morals the more one 
comes to realize that their roots are finally to be 
found in religious conviction. Brotherhood is 
only possible on the assumption that evil motives 
can be kept in subjection, and the experience of 
history seems to prove that only a religion which 
appeals to the heart and conscience of men is 
capable of this. If evil motives can be kept in 
subjection, then the kingdom of God upon earth 
can be realized, but on no other terms. This, I 
take it, was the central truth and purpose of 
Christianity throughout its great historic period. 
By strengthening man it sought to establish and 
fortify the normal in life and society. That 
Christians at times have been drawn to other 
ideals is true, but that the central aim of Chris- 
tianity was the establishment of the kingdom 
of God upon earth the wonderful architecture and 
social organization of the Middle Ages bears 

We have moved so far away from the Middle 
Ages that it is difficult for us to conceive of life 


as it was then lived or religion as it was then 
understood. Religion then was not a thing to 
be indulged in by people who had a bias in that 
direction and ignored by others something apart 
from life with little or no influence on the main 
current of affairs but was the creative force at 
the centre of society ; the mainspring and guiding 
principle that shaped art, politics, business and 
all other activities to a common end. It was 
moreover a culture which united king and peasant, 
craftsman and priest in a common bond of sympathy 
and understanding ; for, unlike modern culture, 
it did not depend upon books and so did not raise 
an intellectual barrier between the literate and 
the illiterate, but united all, however varying the 
extent of their knowledge and understanding. 
The mason who carved the ornaments of a chapel 
or cathedral drew his inspiration from the same 
source of religious tradition as the ploughman who 
sang as lie worked in the field or the minstrel 
who chanted a story in the evening. Modern 
education at the best is a poor substitute for the 
old culture which came to a man at his work. 
The utmost it can do is to give us an opportunity 
of reading in books descriptions of a beautiful 
life which once existed in reality. And let us 
never forget that the central mystery around 
which this life moved was religion. This fact is 
the last one the modernists are willing to admit. 
They may be fascinated by the glamour and 


romance of the Middle Ages, by its wonderful 
architecture and its social organization. But it 
may be said of them what Mr. Chesterton said of 
Ruskin, " that he wanted all parts of the cathedral 
except the altar." 

In accounting for the changes which destroyed 
Mediaeval Society and inaugurated the .modern 
world, it is customary in economic circles to ascribe 
them to the Reformation and the Great Pillage 
which accompanied it. But the Reformation 
itself was the consequence of that many-sided 
movement which we know as the Renaissance, 
which in turn was the direct consequence of that 
awakened interest in Greek and Roman literature, 
science and art in the fourteenth century in Italy 
which followed the Revival of Learning. So that 
when we search for the impulse which first set 
in motion the forces which have created the modern 
world we find it in the labour of scholars who 
ransacked libraries in their enthusiasm for the 
culture of the pagan world. 

The immediate results of their labour were full 
of promise. The rediscovery of the literature and 
art of the ancient world had a wonderfully stimula- 
ting effect on the imagination of Europe, inclining 
as it did at the beginning to give a certain added 
grace and refinement to the vigorous traditions 
of Mediae valism. It seemed, indeed, for a time as 
if the Renaissance was really what its name implies 
a rebirth and that life itself, casting off the 


fetters which bound it, was to come to its own at 
last. But it was not to be. Early in the sixteenth 
century its morning splendour in Italy received 
a check, and as time wore on it became more and 
more evident that the glories of the Renaissance 
were over and that its tyrannies had begun. For 
what happened in Italy happened wherever it 
succeeded in establishing itself. Its immediate 
effect was always that of a stimulant which for 
a time quickened things into a vigorous life. After 
this reaction set in. A kind of staleness overcame 
everything. Mankind suffered spiritual atrophy. 
Religion and art withered as a consequence of the 
forces set in motion, and in spite of attempted 
revivals, have never succeeded in becoming properly 
rooted again, nor will they ever do so until the 
false values which the Renaissance imposed upon 
the world are banished. For, briefly, it may be 
said that the fundamental error of the Renaissance 
was that it everywhere concentrated attention 
upon secondary things to the neglect of the primary 
ones. In its enthusiasm for learning it came to 
exalt knowledge above wisdom, science above 
religion, mechanism above art. The misdirection 
of energy which has followed these false valuations 
has literally turned the world upside down, so that, 
like a pyramid balanced upon its apex, it remains 
in a state of unstable equilibrium. For there 
can be no peace so long as the major powers which 
alone are capable of giving direction to society 


are subjected to the caprice and domination of 
the minor ones. 

It is a fact not without significance that science 
alone has profited by the changes associated 
with the Renaissance. I say it is not without 
significance because science is not a creative but 
a destructive force. Let there be no mistake 
about this. Science always destroys. There are 
of course some things disease, for instance which 
need to be destroyed, and in destroying these science 
does useful work. But the usefulness of science 
is strictly limited. As the handmaid of religion 
and art its services may be invaluable. For it 
is their function to know the why of things, whereas 
science only concerns itself with the how. And 
in a healthy society the why would take precedence 
to the how. When this natural order is reversed 
and science assumes the leadership, society lives 
in peril of its existence. For the liberation of 
natural forces which science aims at effecting is 
to liberate forces which man is powerless to control. 
It is no accident that science has become the 
servant of militarism. Too proud to accept 
spiritual direction, it was left no choice in the 

The materialist spirit which science has helped 
to engender shows itself irreconcilably hostile 
to all the higher interests of mankind. All men 
who care for spiritual things are conscious of this 
antagonism. But hitherto opinion has been 


divided as to the best means of combating it. 
Feeling themselves more or less powerless in the 
face of the vast mechanism of industrialism, many 
such men are inclined to take the view that indus- 
trialism must be accepted to-day as an established 
fact, and urge upon all who are conscious of its 
limitations to seek to supplant its materialist 
direction by a spiritual one. This view, which 
has the advantage of appearing broad and mag- 
nanimous, has the further one of reconciling men 
temporarily to the servitude to which they must 
submit. Nevertheless, it is both impracticable 
and fallacious. The very magnitude of the indus- 
trial system forbids it, thus making of our would- 
be industrial reformers utterly impracticable 
dreamers. Small machines may be used by man, 
but large machinery acquires a will of its own. 
The men who direct it soon find out that they can 
only remain solvent on the assumption that 
they are willing to sacrifice everything to the all- 
absorbing interest of keeping the vast machinery 
in commission. Hence it comes about that it is 
the tendency of industrialism to throw out all 
men who are unwilling to bend their will to the 
will of the machine. It is in the nature of things 
that this should be so. For there are only two 
possible lines of development. Either industry 
must be brought into relation with what we regard 
as the permanent needs of human nature, or human 
nature is not to be regarded as a fixed quantity 



and must adapt itself to the needs of industry. 
There is no third position such as the proposed 
spiritual control of industrialism would suggest. 

Though there exists to-day an undoubted 
antagonism between the material and spiritual 
sides of life, it has not always been so. Whether 
such antagonism exists or not is all a matter of 
proportion. Up to a certain point in the develop- 
ment of civilization no antagonism is felt. The 
material and spiritual aspects of life go hand in 
hand. But beyond a certain point this is no longer 
the case. Separation begins. Henceforth further 
development of one side can only be at the expense 
of the other. It is not a case of any one definitely 
willing this separation. It simply happens as a 
loss of balance consequent upon an undue con- 
centration upon the problems appertaining to 
one side of life. In this sense things are to be 
regarded not as necessarily good or bad in them- 
selves, but may be either according to the pro- 
portion they bear to each other. As in chemistry 
we know that the elements composing any com- 
pound substance will combine with others in a 
certain definite and fixed proportion, and in no 
other, so it appears that in society the material 
and spiritual elements can only combine organi- 
cally when they co-exist in a certain definite 

Exactly what that proportion is it is impossible 
in words to say. What, however, we do know is 


that the material side of life is to day abnormally 
over-developed while the spiritual side is to an 
equal extent under-developed, and this is sufficient 
for practical purposes. For our business being 
to restore the balance now destroyed, we are right 
in supporting whatsoever tends to increase spiritual 
activities on the one hand and to limit material 
ones on the other. In reality, however, this is 
not two forms of activity but one, inasmuch as 
both reforms must proceed simultaneously. The 
material development is to day so overwhelming 
and its force is so irresistible that there can be 
no such thing as a widespread spiritual reawakening 
so long as the material crust in which our life is 
embedded remains unimpaired. That crust will 
need to be broken before the spirit of man can 
move freely again, and there is every reason to 
believe it will be broken before long. For the 
determination of the Government, capitalists 
and others to carry the industrial system after 
the war to its logical conclusion is the surest 
way of ending it, for all the contradictions which 
now underlie our civilization will then come into 
the light of day. Once that happens, the system 
will not be able to go on. The lie upon which it 
is built will be out, and there will be no hiding 
the truth any longer. We shall have to face the 
facts because the facts will be facing us. Unable 
so much as to entertain the idea of a limit to 
material expansion or to conceive of a social 


order fundamentally different from our own, the 
governing class are nevertheless unconsciously 
preparing the way for the new social order by 
seeking political suicide, which of course is the 
only thing they can do considering they cannot 
go forward and are too proud to go back. For 
" pride goeth before a fall." 

Far be it that any words of mine should deter 
our governing class from the pursuit of a policy 
which is so full of beneficent promise for the 
future of mankind. My concern is not with 
them, but with the Socialist and Labour move- 
ments, which I fear may fall into the same pit. 
For the situation after the war will be full of 
dangers for men who have hitherto based their 
policy upon the assumption that industrialism 
has come to stay. They have assured themselves 
so often that " we cannot go back " that they 
will be entirely helpless when confronted with a 
situation through which they cannot go forward. 
If therefore they are not to be taken by surprise, 
if after the war we are not to go to pieces as 
Russia did after' her revolution, it is urgent that 
the leaders of the Socialist and Labour movements 
should pause and think. If they do not, then 
the collapse of the present order will leave society 
entirely without leaders, at the mercy of our 
Jacobins and Bolsheviks, who, like their prede- 
cessors in the French and Russian Revolutions, 
will make the anarchy complete by facing every 


issue as it arises, not with the understanding 
which comes from broad and humane sympathies, 
but in the narrow and mechanical way which is 
only possible to minds drilled in the materialist 
misinterpretation of history. 

That is where I will leave the matter. I have 
drawn attention to the danger which threatens 
us, and I have suggested within certain limits the 
direction in which a solution may be found. If 
you ask for a more detailed plan I reply that such 
is undesirable, for a purpose wedded to details 
may easily suffer shipwreck. Our need, on the 
contrary, is an aim sufficiently noble to unite men 
coupled with an understanding and determination 
to mould circumstances as they arise. A pre- 
cedent condition of success upon such lines is a 
clear and widespread recognition of the problem 
confronting us as it actually exists. If this could 
be secured half of the battle would be won, and 
we need have no fear as to our ability to improvise 
measures when the crisis comes. Meanwhile two 
prejudices stand in the way of such a desideratum. 
One is our utterly irrational faith in the stability 
of industrialism ; the other is an ignorance where 
it is not a wilful misrepresentation of the past. 
Let us not forget that in history, as Mr. Chesterton 
has reminded us, there has never been a Revolution 
which did not in some measure aim at being a 


This is the reason why the law was made, that the 
wickedness of men should be restrained through fear of 
it, and that good men could safely live amongst bad men ; 
and that bad men should be punished by the law and 
should cease to do evil for Tear of the punishment. 

(From the Feuro Juzzo, a collection of laws Gothic and 
Roman in origin, made by the Ilispano-Gothic 
King Chindasvinto, A.D. 6.-jO. In the National 
Library of Spain, Madrid.) 

IT is typical of the confusion in which a gene- 
ration of Collectivist thinking has involved 
social theory that when to-day men specu- 
late on the attributes of the State in the society 
of the future they invariably proceed upon the 
assumption that its primary function is that of 
organization. The syndicalist, with his firmer grip 
on reality, realizing that the State is an extremely 
bad and incompetent organizer, rightly comes, to 
the conclusion that if the State can find no better 
apology for its existence it is an encumbrance a 
conclusion from which I can see no escape for 



such as conceive organization to be the primary 
function of the State. 

National Guildsmen, though accepting the State 
as essential to a well-ordered society, have not 
always been able to escape from this dilemma. 
Mr. Hobson l dismisses the idea of organization 
being the primary function of the State, but 
conceives of it as spiritual, though the examples 
he gives in support of his contention, with the 
exception of education, namely, foreign policy, 
public health and local government, appear to me 
to be more mundane than spiritual. This con- 
tention, however, is begging the question. It is 
not a satisfactory answer to the Syndicalist. It 
suggests the existence of activities with which a 
Guild Congress may not be qualified to deal, but 
it offers us no clear principle for guidance. Mr. 
Hobson 's understanding of " spiritual " is different 
from mine ; and I would say that if the State 
cannot justify itself as an organizer, it certainly 
cannot do so as a spiritual influence. Not only 
does it not exercise any spiritual influence to-day, 
but it is questionable if the State has ever done 
so in the past. On the contrary, the State appears 
to exercise a baneful influence on whatever spiritual 
activities it has taken under its protection. Most 
people would agree that the influence of the 
State upon the Anglican Church has been a most 

1 Guild Principles in Peace and War, by S. G. Hobson 
(S. Bell & Son). 


depressing one ; while it is significant that in the 
one section of this Church which is to-day alive 
the High Church advocates of disestablishment 
are to be found. Nobody will be found to defend 
our national educational system or to maintain 
that the participation of the State in the task of 
education has in any way fulfilled the expectations 
of its promoters. Nor, again, can any one maintain 
that the patronage of the arts by the State exhibits 
any degree of insight or understanding. It is, I 
believe, in the nature of things that this should 
be so, for the State is of the earth earthy. The 
problem of temporal power which engages its 
attention does not tend to create an atmosphere 
favourable to the growth and development of 
things spiritual. 

If, then, the State is not to be justified as an 
organizer nor can it exercise spiritual functions, 
on what grounds is it to be justified ? The experi- 
ence of history provides the answer. The function 
of the State is to give protection to the com- 
munity military protection in the first place, 
civil protection in the next, and economic pro- 
tection in the last. Let me deal with economic 
protection first ; for if I am to be understood at 
all it is necessary to make it clear that I refer to 
something very different from the Protection of 
current politics. Protection is a double-edged 
sword and may just as easily be a cur^ as a 
blessing. Protection against the economic enemy 


beyond the seas is the necessary corollary of any 
stable economic system. But protection against 
the economic enemy at home is the primary 
necessity, for it means the protection of the workers 
against exploitation. It involves a restoration of 
the Guilds. By chartering these the State gives 
economic protection to the community. 

The connection between an economic protection 
of this order and military and civil protection 
may not at first sight be obvious. But a little 
thought will perhaps show that they are mutually 
dependent. All these forms of protection have 
this one thing in common they seek to guard 
society against the depredations of the man of prey. 
Economic protection or privilege is demanded 
for the Guild in order to prevent the man of prey 
from securing his ends by means of trickery. 
Civil protection is demanded in order to prevent 
the same type of man from securing his ends by 
means of personal violence. Military protection 
is demanded in order to secure the community 
against attacks from without, which is the inevitable 
consequence of the domination of an adjacent 
people by men of this type. From this point of 
view the differing psychology of nations is to .be 
explained. The internationalist may be right in 
affirming that, taken in the mass, men are very 
much alike all over the world. But in practical 
affairs what makes the difference is the type of 
man that dominates a civilization, for the domi- 


nating type gives the tone to a community, and 
it is that which in politics must be reckoned with. 
The manifest truth of this view of the function 
of the State has been obscured by two things : 
firstly, by the undoubted fact that in our day 
the State is very much at the mercy of the man 
of prey ; and secondly, by the acceptance of re- 
formers of Rousseau's doctrine of the " natural 
perfection of mankind." The first may or may 
not be a reason for giving the existing State an 
unqualified support, since law is no longer 
enacted to enable good men to live among bad, 
but to enable rich men to live among poor. The 
second is a more serious matter, because it tends 
to confirm the man of prey in the possession of 
the State by standing in the way of the only thing 
that can finally dislodge him the growth of a 
true social philosophy. It has always been a 
mystery to me why Rousseau's doctrine should 
have found acceptance among Socialists. How 
they reconcile their belief in the natural perfection 
of mankind with their violent hatred of capitalists 
I am entirely at a loss to understand. If the 
domination of the modern world by capitalists 
is not to be explained on the hypothesis that 
when the State withdrew economic protection 
from its citizens by suppressing the Guilds the 
capitalists, by a process of natural selection, came 
to dominate the lives of .the more scrupulous 
members of society, then how is it to be explained ? 


To exonerate capitalists from personal responsi- 
bility by blaming the " system " is pure nonsense, 
because it presupposes the existence of a social 
system independent of the wills of its individual 
members, and especially of capitalists who are 
its dominating type. Moreover to speak of 
capitalism as the capitalist system is itself a mis- 
nomer, for it is not in any sense a system. On the 
contrary, capitalism is a chaotic and disorderly 
growth, while every effort to bring order into it 
reacts to increase the prevailing confusion. 
Socialists are right in hating capitalists ; they are 
wrong in denying the only rational justification 
for that hatred original sin. I insist upon a 
frank recognition of this fact because I do not see 
how the Guilds are to be restored apart from it. 
Just in the same way as the modern Parliamentary 
system is the political expression of the doctrine 
of the natural perfection of mankind, so the Guild 
system in the Middle Ages was the political expres- 
sion of the doctrine of original sin. About this 
no two opinions are possible. The Mediaevalists 
realized that rogues are born as well as made, 
and that the only way to prevent the growth of 
a cult of roguery such as oppresses the modern 
world is to recognize frankly the existence of evil 
tendencies in men and to legislate accordingly. 
It was for this reason that they sought to suppress 
profiteering in its various forms of forestalling, 
regrating and adulteration ; for they realized 


that rogues are dangerous men, and that the only 
way to control them is to suppress them at the 
start by insisting that all men who set up in 
business should conform to a strict code of morality 
in their business dealings and daily life. Liberal- 
ism, with its faith in the natural perfection of 
mankind, was based upon the opposite assumption 
that the best will come to the top if men are 
left free to follow their own desires. They sought 
to inaugurate an industrial millennium by denying 
economic protection to the workers, while they 
dreamed of a day when military protection would 
no longer be necessary. Both of these illusions 
have been shattered by the war, but the doctrine 
upon which they were built the natural per- 
fection of mankind remains to perpetuate our 
confusion. When it, too, is shattered we may 
recover the theory of the State. 


THERE can be little doubt that the struggle 
which will decide the form which Socialist 
thought and action must finally take 
will be fought between the Neo-Marxians and 
Guild Socialists. For though the immediate 
practical proposals of the two movements have 
sufficient in common for the differences to appear 
to a Collectivist as the differences between the 
moderate and extreme parties into which all 
movements tend to divide, yet they are finally 
separated by principles which are as the poles 
asunder, and Socialists must before long choose 
between them. As the situation develops they 
must cleave either to a purely materialist or to a 
spiritual conception of the nature of the problem 
which confronts us. They cannot remain in their 
present indeterminate state. 

Though a collision between the two movements 
is inevitable, so far nothing more than skirmishes 
between outposts have taken place. Yet they 



are sufficient to indicate upon what lines the 
attack of the Neo-Marxians is likely to develop. 
Guild Socialism, it appears, is not acceptable to 
men whose central article of faith is the class war. 
Though Guild Socialism has arisen in opposition 
to Collectivism, and though, I believe, when it 
has reached its final form, it will be found to be 
farther removed from Collectivism than Neo- 
Marxianism itself, nevertheless, Mr. Walton 
Newbold l tells us that the Neo-Marxians firmly 
and honestly believe it to be a bureaucratic varia- 
tion of Collectivism intended to perpetuate the 
authority of the middle class. 

That the Neo-Marxians should have chosen 
this line of attack is significant. It testifies to 
what is uppermost in their minds. For though 
in their propaganda they demand social justice 
for the workers, it is manifest that class-hatred 
rather than the desire for justice is the mainspring 
of their actions. I hold no brief for the middle 
class. It has many and grievous faults, and it 
pays for them dearly in defeat, in isolation, in 
lack of hold upon the modern world. So far from 
seeking to save itself in the manner which the Neo- 
Marxians suspect, it has not to-day sufficient 
faith to believe it might be successful if it made 
the attempt, and it is increasingly reconciling 
itself to an idea of Marx which the Neo-Marxians 

' Letters to the New Age, by J. T. Walton Newbold, 
May 30 and June 27, 1918. 


appear to have forgotten that the middle class 
will become merged in the proletariat. Anyway, 
on no other hypothesis except pure idealism can 
I explain the action of those middle-class Socialists 
who have sought to advocate the Guilds. For 
if they imagine they are going to save the middle 
class by the promotion of a system of democratic 
organization in every unit of which they would 
be in a hopeless minority, then all I can say is 
that they must be fools of the first order and are 
entitled to the contempt with which Mr. Newbold 
regards them. Further, if the Neo-Marxian con- 
tention is correct they must explain why the 
National Guilds League opposed the Whitley 
Report, for the middle class has certainly nothing 
to lose by its adoption. 

Facts of this kind are not to be gainsaid. The 
reason why Guild Socialists propose to include the 
salariat in the Guild is a purely practical one. The 
simplest way to bring the capitalist system to an 
end is for the workers to take over the industries 
of the country as they actually exist. This is 
common sense and nothing more. Modern industry 
is a very complex affair, and our daily needs require 
that the various people concerned in industry 
can be persuaded to co-operate together. But 
if any radical change is to be brought about, and 
the spirit of co-operation maintained, it can only 
be on the assumption that the workers are mag- 
nanimous when they are victorious. This is the 


way all the world's great conquerors have con- 
solidated their power ; and the workers will never 
be able to carry through a successful revolution 
until they understand it. For magnanimity dis- 
arms opposition. But to preach the class war is 
to court failure in advance, for it is to seek the 
establishment of power, not on a basis of mag- 
nanimity, but of suspicion ; and this robs victory 
of its fruits by rendering politically impracticable 
those very measures which, if enacted, would 
make victory permanent. In such circumstances, 
the defeated become desperate, are afraid to give 
in, and, seeing no hope for themselves in the new 
order, they band themselves together to restore 
the old. It is thus that revolution is followed by 
counter-revolution and the workers are defeated. 
The right method, it seems to me, is not to 
preach revolution, but to preach ideas. It is 
necessary to form in the mind of the people some 
conception of what the new social order will be 
like. When the mind of the people is saturated 
with such ideas one of two things must happen. 
Either the Government must acquiesce in the 
popular demand, or revolution will ensue. The 
former is preferable because, as the change can 
then be inaugurated with cool heads, it is more 
likely to be permanent. It is no argument against 
this method to say that the Labour Party has 
failed. Firstly, because the Labour Party is an 
insignificant minority and therefore cannot 


exercise power ; and, secondly, because the 
Labour Party never made up its mind what it 
really wanted. This latter reason makes it fairly 
safe to say that if the Labour Party should get 
into power at the next election it would not be 
able to effect radical change. In these circum- 
stances our immediate work should not be to bully 
the Labour Party, which, in the nature of things, 
can only reflect opinion, but so to clarify our ideas 
that unanimity of opinion will make its appearance 
in the Labour movement. The danger is that 
the people may succeed to power before ideas are 
ripe. We might then expect a succession of 
violent conflicts proceeding from the attempt to 
realize an unrealizable thing. This is what 
happened in the French Revolution, when the 
Jacobins, obsessed with the idea of a democratic 
centralized government, refused to tolerate any 
other organizations within the State, thus opposing 
the formation of those very organizations which 
render a real democracy possible. The Neo- 
Marxians by repudiating State-action altogether 
seem to Guild Socialists to be falling into an error 
the exact opposite to that of the French Revolu- 
tionists. Their society would fall to pieces for 
lack of a co-ordinating power ; if the present 
order were thrown over in its entirety, it would be 
impossible to improvise arrangements to meet the 
situation which would be created. We should be 
starved at the end of a fortnight. 



If starvation has been the fate of Russia, which 
is an agricultural country, and where the class 
war in the main has meant only the abolition of 
landlords, how much more will it be the case in 
a highly industrialized State like our own which 
can be maintained only by a very high degree of 
co-operation, and where the middle class forms 
such a large proportion of the community. If 
the working class of Russia could not abolish two 
per cent, of the population without precipitating 
social chaos, what chance have the working class 
in this country after abolishing thirty per cent. ? 
On the other hand, if the advice of Guild Socialists 
is followed and industries are taken over in the 
first place as they exist, the complete democratiza- 
tion of industry could at the most only be a matter 
of a few years, for the working class would be in 
a majority in every Guild. 

That a scheme calculated to have such an 
effect should have originated among middle-class 
Socialists only appears incredible to Mr. Newbold 
and his friends because they will persist in approach- 
ing every question from the point of view of class. 
But it is not incredible when we realize that middle- 
class Socialists are often as much " fed up " with 
the existing system as members of the proletariat, 
though perhaps for different reasons. The mis- 
understanding and consequent suspicion which 
Neo-Marxians have for middle-class Socialists is 
largely due to the fact that different motives 


bring them into the movement. Viewing every- 
thing from a purely economic point of view, the 
Neo-Marxians are unable to understand that men 
may be very dissatisfied with the existing state 
of society though they are in fairly comfortable 
circumstances. They may dislike the work they 
are compelled to do, or they may be interested 
in the arts, or some other subject, and finding 
commercialism opposed to all they want to do, 
come to hate the system. The more educated 
and the more imaginative a man is the more 
restless he will become under the present system, 
because the more he may find himself balked and 
thwarted in life. Most men love to do good work, 
and they learn to despise a system which compels 
them to do bad. With the typical Fabian the 
motive is apt to be purely philanthropic. It is 
this that has led them astray. They came to 
support bureaucracy because they wanted an 
instrument with which to abolish poverty ; and 
in regard to anti-sweating legislation they have 
proved to be right. Their mistake was to advocate 
as a general principle a form of organization which 
is only to be justified under very exceptional cir- 
cumstances for dealing with exceptional problems. 
The idea that bureaucracy is a method of organi- 
zation peculiarly acceptable to the middle class 
is a romantic illusion which exists entirely in the 
Marxian imagination. Some years ago (ten or 
more) I attended a meeting of the Fabian Society 


and heard Mr. Webb, while protesting against 
the attitude of certain Fabians who objected to 
officials, affirm that under Socialism all men 
would be officials. The announcement was received 
in dead silence as something altogether incredible. 
It was clear even then that Fabians did not alto- 
gether relish the idea of society being organized 
on a bureaucratic basis. Mr. Webb got his own 
way, not because the feeling of the meeting was 
with him, but because his critics could not at the 
time offer any alternative. The triumph of Mr. 
Webb in the Socialist movement was due entirely 
to the fact that he was definite and knew exactly 
what he wanted ; whereas those who were opposed 
to him did not, and those who supported him were 
entirely unconscious of where his policy was 
leading. Many evil things come about this way ; 
there are more fools in the world than rogues, 
and, generally speaking, we are much more likely 
to get at the truth of things by assuming that 
most men are fools than by assuming they are 
rogues. Let us not forget that the road to hell 
is often paved with good intentions. If Marxians 
would think more of psychology they would not 
be so full of suspicions. They would begin to 
understand that man is a many-sided and complex 
creature and is not to be explained entirely in 
terms of economics. 

.Such an understanding would revolutionize 
their policy. From being exclusive they would 


seek to become inclusive. Instead of espousing 
a doctrine which sets every man's hand against 
his neighbour, they would seek the creation of 
a synthesis sufficiently wide to be capable of 
welding together different types of men in the 
effort to establish a new social order. Their 
present policy leads nowhere. Neo-Marxians may 
begin by repudiating middle-class Socialists as 
men whose interests are opposed to those of the 
working class. But if I am not mistaken, it will 
not end there. Before long they will be required 
to repudiate the parasitic proletariat as dependents 
of the rich ; after which they will have to repudiate 
skilled workers as members of a privileged class. 
Where will working-class solidarity be then ? 
Nowhere, I imagine ; for the working c] iss will 
be a house divided against itself. I say it will be. 
Truth to tell, it already is. 


While the Guild movement acknowledges a 
different starting-point from that of the Neo- 
Marxians, it moves towards a different goal. That 
goal is symbolized in the word " Guild." I 
wonder how many Neo-Marxians have ever 
pondered over the significance of that word, 
For it is a symbol of the past a past to which 
many Guildsmen hope to return. It was not 
idly chosen. The right to use it had to be fought 
for. It could not have been used by the National 


Guild movement had not the formulation of its 
policy been preceded by a movement or agitation 
which for a generation sought to remove prejudices 
against an institution in the past which an ever- 
increasing number of men to-day are coming to 
recognize as the normal form of social organization. 
This battle was fought out among our much- 
despised intellectuals by historians, craftsmen, 
architects and others, who realized that the pre- 
judice which had been created by interested persons 
in the past against Mediaeval institutions had 
become a peril to society. Leading men to look 
with suspicion upon all normal social arrangements, 
it tended to thwart all efforts to reconstruct society 
on a democratic basis by diverting the energies 
of the people into false channels. How much 
of the discord and ill-feeling which prevails between 
the different sections of the reform movement 
had its origin in prejudice against the past it is 
impossible to say ; but it is a certainty that 
Collectivism as a theory of social salvation could 
only have been formulated by men whose minds 
had been formed on a false reading of history. 
And as the gospel of the class war owes its present 
popularity to the disappointment which followed 
attempts to reduce Collectivism to practice, the 
popular misconceptions of history are to be held 
responsible for much. 

That the Neo-Marxians should consider the 
Guild movement to be merely a variation of 


Collectivism shows how completely they mis- 
understand not only the underlying purpose of 
the movement, but its history too. For not only 
are the principles of Collectivism and Guilds 
fundamentally opposed, inasmuch as the method 
of the former is control from without by the 
consumer, while the method of the latter is control 
from within by the producer, but Guildsmen were 
accustomed to attack Collectivism long before 
Marxians came to suspect it. But it was not 
until Socialists were disillusionized over Collectivism 
that Guildsmen could get a popular hearing. When 
in February 1906 my Restoration of the Guild 
System, which contained a destructive analysis of 
Collectivism, appeared, it was held up to ridicule 
by the Socialist and Labour Press. 1 And now 
at last, when the current of opinion has turned 
in our favour, Mr. Ncwbold tells us that the Neo- 
Marxians regard the Guild movement as a variation 
of bureaucratic Collectivism. This opinion they 
arrive at, not from any careful economic analysis 
such as we have a right to expect from men who 
profess economic infallibility, but because, knowing 

1 Here is an extract from a review iu ih^ Labour Leader, 
July 20, 1906 : 

" Mr. Pcnty's criticism of Socialism might have been 
written by a dweller in Cloud Cuckoo-Town. As the 
German evolved from the depths of his inner conscious- 
ness a camel which bore as much resemblance to the 
real thing as a kangaroo docs to a cow, so Mr. Penty has 
evoked from the vasty deeps a chimera equally grotesque." 


something about psychology, which they do not, 
we refuse to join them in the class war ; just as 
if the only differences which could possibly divide 
Socialists were differences of policy and that 
differences of principle were matters of no import- 
ance. Twelve years ago they wanted to rend us 
because we were not Collectivists ; to-day, because 
they imagine we are. 

The fundamental differences of principle which 
separate Guildsmen from Collectivists and Neo- 
Marxians alike will become more pronounced as 
the Guild scheme unfolds. The New Age has 
said that National Guilds " is rather the first than 
the last word in national industrial organization." 
It is in this light that the present proposals of the 
movement should be regarded. If a fuller pro- 
gramme has not hitherto been put forward it is 
not because Guildsmen will be satisfied with the 
present minimum, but because a general agree- 
ment has not yet been reached with respect to 
the more ultimate issues. Guildsmen have been 
forewarned by the fate of Collectivists from advanc- 
ing a wide and comprehensive programme which 
has not been properly thought out, since only 
disaster can follow such a course. All the same, 
some unanimity of opinion is coming into existence 
in regard to wider issues, and as, generally speaking, 
it is in the direction I should like to see things 
go, I will venture my opinion for what it is worth 
as to our ultimate destination. 


As I interpret the Guild movement, it is the 
first sign of a change in thought which will seek to 
solve the social problem, not by a further develop- 
ment along present lines, which can only lead us 
to fresh disasters, but by effecting a return to the 
civilization of the Middle Ages. I do not mean 
by this that we shall in the future recover every 
feature of that era or that many things which 
exist to-day will not be retained in the future. 
I mean that in the first place we shall resume in 
general terms the Mediaeval point of view and that 
this will involve a return to Mediaeval ideas of 
organization. My reasons for believing this are 
that I think we are moving into an economic 
cul-de-sac from which the only escape is backwards ; 
and that if the interests of life are to take prece- 
dence of the interests of capital we are inevitably 
driven into a position which approximates to that 
of the Mediaeval economists. The whole trend 
of ecbnomic development from Renaissance times 
onward, which has led to the enthronement of 
capitalism, has been to reverse the Mediaeval 

In believing thus that capitalism will reach a 
climax in its development beyond which it can 
proceed no farther, I am at one with Marx in his 
interpretation of the evolution of capitalism. It 
seems to me that Marx predicted very accurately 
the trend of capitalist development. He foresaw 
that industry would tend to get into fewer and 


fewer hands, but it cannot be claimed that the 
deductions he made from this forecast are proving 
to be correct, for he did not foresee this war. 1 
Not having foreseen this war, Marx did not 
foresee the anti-climax in which the present 
system seems destined to end. And this is fatal 
to his whole social theory, because it brings 
into the light of day a weakness which runs 
through all that he says his inability to 
understand the psychological factor, and hence 
to make allowances for it in his calculations. 
Marx saw the material forces at work in society 
up to a certain point very clearly and from this 
point of view he is worthy of study. But he never 
understood that this was only one half of the 
problem and finally the less important half. Al- 
though Marx clearly foresaw the trend of economic 
development, he did not see that it had been 
accompanied by a loss of spirituality, and that 
simultaneously with the concentration of attention 
upon material things, religion and art had lost 
their hold over men. From this historical con- 
sideration it may be affirmed that the spirit of 
avarice grows in inverse ratio to the interest and 
activity in religion and art. And as both of these 

1 The circumstance that Marx gave it as his opinion 
that the annexation of Alsace and Lorraine by Germany 
would lead at a later date to a European war does not 
acquit him, for the war he had in mind was a war of 
revenge, not an economic war, which this one certainly is. 


activities were undermined by the changed outlook 
towards life and the forces set in motion by the 
Renaissance, the spirit of avarice became triumphant. 
In the same way that an epidemic to which healthy 
people are immune tends to spread rapidly among 
people of a low physical vitality, so avarice claims 
its victims among people to-day because, owing 
to the separation of religion and art from life, the 
mass of the people live in a state of low spiritual 

An understanding of what I may call " the 
spiritual interpretation of history " will bring us 
nearer to an understanding of the Guild movement. 
It has been well described as a religion, an art 
and a philosophy, with economic feet. That is 
really what it is. For its aim is nothing less than 
to restore that unity to life which the Renaissance 
destroyed. Recognizing that every social system 
is but the reflection of certain ways of thinking 
certain ideas of life it seeks to change society 
by changing the substance of thought and life. 
But, unlike other movements which have aimed 
at spiritual regeneration, it deems it advisable to 
begin at the economic end of the problem in the 
belief that it is only by and through attacking 
material and concrete evils that a spiritual awaken- 
ing is possible. For to quote the words of Mr. de 
Maeztu l " men cannot unite immediately among 

1 Authority, Liberty, and Function, by Ramiro de Maeztu 
(George Allen & Unwin, 45. 6d.). 


one another ; they unite in things, in common 
values, in the pursuit of common ends." 

We can agree with the Neo-Marxians in recog- 
nizing that under the existing economic system 
the interests of capital and labour are irreconcilably 
opposed, and that no compromise is possible. 
Where we differ from them is in respect of issues 
about which we are not prepared to compromise. 
They envisage the problem primarily in the terms 
of persons and as a warfare between the classes. 
We, on the contrary, see this conflict of interests 
as the inevitable accompaniment of a materialist 
ideal of life which rejects religion and art with their 
sweetening and humanizing influence. Tracing 
the existence of the problem to a different origin, 
we naturally seek for it a different solution. We 
meet the Marxian affirmation that the problem 
is material by affirming that it is both spiritual 
and material. And we part company by reminding 
them that " man does not live by bread alone." 

Finally, I would plead for a more generous 
attitude of mind among the various sections of 
the Socialist movement. If the existing economic 
s}7stem based upon competition is to be replaced 
by one based upon co-operation, the communal 
spirit must be substituted for the present indi- 
vidualist one. But the no-compromise policy of 
the Neo-Marxians tends to postpone the arrival 
of that spirit indefinitely by sowing the seeds of 
discord and suspicion everywhere. All move- 


ments rest upon trust and confidence, and these 
are impossible apart from a certain charity of 
spirit which will make some allowance for human 
weakness and mistaken judgments. For all men 
at times are apt to err. Would it not be wiser, 
therefore, instead of always accusing others of 
interested motives, to try first to understand them 
to see whether difficulties are not to be explained 
on other grounds ? If Neo-Marxians refuse such 
counsel and still maintain that their suspicions 
are justified and that only self-interests prevail, 
then in the name of logic I do not see how even 
they can claim to be an exception to this rule. 
What guarantee have we that they, like others, are 
not on the make ? How are we to know that they 
are not seeking the support of the working classes 
for their own selfish ends ? I do not say that this 
is so. What I do say is that it is the logical deduc- 
tion from their position. And it is a deduction 
from the consequences of which they may not 
be able finally to escape. For if, by some chance, 
power should pass into their hands, they will be 
expected to live up to their promises. When 
they are in difficult circumstances, as all men 
in power find themselves at times, and have to 
choose between two evils, they must not be sur- 
prised if those whom they have had no option 
but to disappoint apply the same standards to 
themselves. It will be no use for them to 
plead extenuating circumstances, for extenuating 


circumstances are no part of the Neo-Marxian phil- 
osophy. And they must not expect more generosity 
from their supporters than they have extended to 
others. Out of fear of them they will be driven 
from one act of desperation to another, until finally 
they bring into existence a circle of enemies suffi- 
ciently strong to encompass their downfall. And 
their enemies will show them no mercy. Such 
was the fate of the uncompromising Jacobins 
of the French Revolution, and if I am not mistaken 
it will be the fate of Lenin and Trotsky to-morrow. 
It is the fate of all political extremists who seek 
to establish power on a basis of suspicion. 


Though the criticisms which Mr. Newbold has 
made against middle-class Socialists can be easily 
refuted, it is possible they have not been finally 
disposed of, inasmuch as the differences are much 
more fundamental than a mere misunderstanding. 
As always happens in respect of issues of a funda- 
mental nature, people find it extremely difficult 
to say exactly what they mean, and it may be 
that the Neo-Marxians in their relations with 
the middle-class Socialists feel an instinctive 
antipathy which so far they have been unable to 

Whatever may be the explanation of the anti- 
pathy shown by Mr. Newbold, I can scarcely think 


he really means what he says when he questions 
the right of middle-class Socialists to take part 
in Labour activities ; for on that basis not only 
would he, as a middle-class person, be excluded, 
but it may be said that nearly all Socialist literature 
has been written and all the pioneer work has been 
done by middle-class persons, so that but for their 
assistance the Socialist movement would never 
have come into existence. I conclude, therefore, 
that he must mean something else. 

It has been suggested that the secret of the 
trouble may be that Labour has " come of age," 
and in consequence the advice of middle-class 
Socialists is resented much in the same way that 
a son is apt to resent the advice of a father who 
fails to realize that his son has grown up. The 
father's advice may be right, but it is necessary 
for the son to act on his own initiative in order 
that he may feel his feet in the world. 

Though this is an explanation of the estrange- 
ment, it does not satisfy me. I can scarcely think 
that the Labour movement is so shortsighted as 
to resent advice given by those outside of its class 
if it found such advice really helpful. The trouble 
is, I think, that until quite recently, when the 
Guild propaganda began to make headway, the 
intellectual leadership of the Socialist movement 
was entirely in the hands of the Fabians, and I 
fear they have queered the pitch for us. For their 
sympathies were not really democratic. It was 


poverty rather than wage-slavery they were 
anxious to abolish, and so, instead of seeking to 
interpret the subconscious instincts of the workers 
and to direct them into their proper channels, 
they sought to impose an economic system upon 
them which left human nature entirely out of 
account. As might have been expected, human 
nature has rebelled. The workers, having thrown 
over Collectivism, are trying to grope their way 
towards a solution of their problems. Left to 
their own resources, the workers have undoubtedly 
seized upon an important truth that any solution 
of the economic problem must come as the result 
of a struggle a truth that Guildsmen alone among 
intellectuals have recognized. Meanwhile, the 
repudiation by Labour of its leaders is not to be 
interpreted as a denial of the necessity for leader- 
ship, but rather as a protest against leaders who 
cannot lead, because their eyes are turned in the 
wrong direction. 

Looking at the situation from this point of 
view, our immediate need is to ^define our position 
in regard to industrialism in terms that admit 
of no ambiguity. As a means towards this end 
it is imperative that we should in the first place 
not only look round and take stock of the situation 
which is developing, but anticipate within certain 
limits the situation which will have to be faced 
after the war. In this connection everything 
points to the coming of a great struggle between 


Capital and Labour. At the moment Labour has 
Capital at a disadvantage. But after the war 
Capital intends to get even again. According to 
all reports capitalists are everywhere sharpening 
their knives, determined, if they must die, that 
they will die fighting. Though I doubt not that 
in the long run Labour will be triumphant, I am 
by no means sure that victory will follow the first 
encounter unless the Army makes common 
cause with Labour when it returns from France, 
which is not at all unlikely when we consider 
the bitter resentment which has been caused 
by the utterly inadequate pay and separation 
allowances. But in any case the outlook is not 
immediately very promising whichever side wins. 
If Capital is victorious we shall- be committed to 
tin industrial policy .which can only eventuate 
in further wars ; for a state of things in which war 
is an ever-present contingency must be the inevit- 
able consequence of the insane policy of for ever 
seeking to effect an increase in the volume of pro- 
duction, remembering that markets were already 
filled to overflowing before the war. On the other 
hand, if Labour wins, the immediate prospects 
are no more reassuring. There is a danger that in 
such an event we may pass through all the phases 
common to social revolutions ere sanity will prevail. 
I say there is this danger. I do not, however, 
think it is inevitable. Whether or no we pass 
through all these phases depends upon the extent 



to which we can intelligently anticipate possible 
happenings in the future and can guard ourselves 
against pitfalls. This task should not be impossible, 
considering that we have the experiences of the 
Russian Revolution to draw upon. In our antici- 
pated revolution, as in the Russian, the moderate 
party will come first. For we may be assured 
that whenever the Labour Party arrives with a 
majority in the House of Commons it will be com- 
posed of moderate men. It is the very moderation 
of the Labour Party that will be its undoing, for 
it will be unable to act decisively in any direction. 
This is easily understood when we remember 
that its members are held together by no common 
bond of principle. It is only necessary to read 
the reports of the Labour conferences to realize 
that the Labour Party does not know where it 
stands. Though Collectivism as a social theory 
is entirely discredited, the Labour Party is still 
vaguely Collectivist in one direction, while in 
the other its members are simple trade unionists 
with no general social theory vaguely Liberal 
if they are anything at all. 

Naturally it will be impossible for such a hetero- 
geneous body to act with any unanimity and 
decision. It will be the old story over again. 
Just as after 1906, when the workers were dis- 
appointed with the doings of the Labour Party, 
they turned against it in violent disgust and 
inaugurated an internecine warfare which con- 


tinned almost until the outbreak of war, so it 
may be expected that a similar disgust will follow 
the establishment of a Labour Government. For 
it will dilly-dally with things, and all its actions 
will be feeble. Then the great crisis will arrive, 
and our future history will depend entirely on 
the way it is met. Once confidence is destroyed 
in moderate men, there is a danger of things rushing 
to the opposite extreme. The Neo-Marxians (our 
Bolsheviks) will get their chance. They will 
point to the impotence of the Labour Party, 
accuse its leaders of lack of courage and a desire 
to make terms with the enemy and conspire to 
seize power and inaugurate the class war. If 
they succeed we shall go the way Russia has gone 
to anarchy. But there is no reason why they 
should succeed. It will be our fault if they do. 
The situation could be steadied by a vigorous 
propaganda which would change the basis of the 
struggle from a warfare about persons to a warfare 
about ideas or things. Let me explain. 

It is apparent, when we think about it, that the 
anticipated failure of a Labour Government could 
be accounted for in one of two ways. It could be 
ascribed to the corruption and moral cowardice of 
its members, or it could be attributed to lack of 
ideas the absence of a social theory adequate 
to the situation which confronted them. The 
Neo-Marxians, envisaging the problem primarily 
in the terms of persons as a warfare between classes, 


would doubtless seize upon the personal aspect 
of the failure. Guildsmen, I hope, would be more 
generous in their criticisms. They should not 
accuse the Labour men of being knaves when they 
are transparently as innocent as fools. For who 
but fools would imagine it possible to find a solution 
to a political and economic problem the like of 
which has never been seen in history merely by 
means of a parliamentary majority united not 
by the possession of common principles but only 
in common aspirations ? Who but fools could 
imagine that a majority so constituted could stand 
for one moment the shock of actuality ? Realizing 
that the failure of a Labour Government may 
safely be predicted from its entire absence of 
social principles, Guildsmen should take every 
opportunity of driving this point home, insisting 
that goodwill is no substitute for ideas. They 
should, moreover, be careful to point out that 
Neo-Marxians differ from the Labour Party only 
to the extent of substituting ill will for good will 
inasmuch as the Labour Party and the Neo- 
Marxians have alike occupied their minds entirely 
with the problem of how power may be won to 
the utter neglect of the problem how it may be 
retained and used. 

Not only are the Neo-Marxians without any 
social theory in the sense that they have never 
applied themselves to the task of elaborating the 
principles upon which a democratic and communal 


society must rest, but they appear to be unaware 
that one is necessary. All they see is that power 
to-day is in the hands of capitalists, and they 
want to see it transferred into those of the workers. 
That is very good so far as it goes. But it is 
insufficient for the purpose of reconstructing 
society, which they would be called upon to do 
if ever they succeeded to power ; because if 
industry suddenly changed hands and the salariat 
were banished, as they propose, everything would 
not go on sweetly as before. The centre of gravity 
of industry would have completely changed. This 
change would introduce a host of problems that 
would demand immediate solution. It is vain 
to suppose that without clearly defined principles 
to guide them men unaccustomed to power would 
prove equal to the task. They would be like 
amateurs in possession of a powerful and unfamiliar 
weapon which, mishandled, would be much more 
likely .to destroy them than the enemy. 

As herculean a task as the solution of the econo- 
mic problem is for any Government, its difficulties 
will be increased a thousandfold for the Neo- 
Marxians if ever they get into power ; for their 
class-war policy carried into execution will com- 
plicate the economic problem by a psychological 
one of equal magnitude which, like the Bolsheviks, 
they will have no idea how to meet except by force. 
Now force in the hands of materialists always 
produces the very opposite effect to that which is 


intended, for materialists never understand psy- 
chology. But I fear it is useless to reason with 
Neo-Marxians about such things. They will never 
know anything about these problems until they 
are up against them, when they will be the most 
siirprised people in the world. 

Recognizing, then, the danger which would follow 
the success of the Neo-Marxians in such a crisis, 
Guildsmen should, by an intelligent anticipation 
of events, take measures to protect their flank. 
They should inaugurate a vigorous propaganda 
against the impossibilism of the Neo-Marxians. 
If in such an effort they are to succeed, it is essential 
before all things that the good faith of the Neo- 
Marxians be taken for granted, and that Guildsmen 
should seek to discredit them by carrying Neo- 
Marxian ideas to their logical conclusion, showing 
how their excess of zeal must defeat their own 
ends by provoking reaction, since the mass of the 
people will become so weary of the anarchy which 
must follow the inauguration of the class war, 
that they will come to welcome a return of the old 
regime merely for the sake of peace and quietness. 
It should not be difficult to drive these truths 
home considering that both the Russian and the 
French Revolutions provide abundant illustrations 
of how class warfare fails to achieve its ends. 

Further, Guildsmen must show the Neo-Marxians 
that their ideas are not only subversive of others 
but of themselves. Neo-Marxians are very fond 


of insisting " that the method prevailing in any 
society of producing the material livelihood deter- 
mines the social, political and intellectual life 
of men in general," but it never apparently occurs 
to them to make the deduction that in that case 
they and their gospel also become a part of the 
disease of society a deduction which is not only 
evidenced by the fact that the Neo-Marxian gospel 
finds its warmest supports in those districts where 
industrialism is most highly developed, but that 
Neo-Marxians are so much a part of the system 
as to be incapable of imagining any other. They 
do not propose to change the system, but only 
its ownership. 

From this point of view, it could easily be shown 
that in comparison with Guildsmen the Neo- 
Marxians are merely Conservatives ; for Guildsmen 
have not only questioned industrialism, they have 
some idea of what to put in its place. They realize 
that as its retention must involve society in suc- 
cessive wars they must destroy it, or it will destroy 
them. It is the clear recognition of this fact 
that inclines an ever increasing number of Guilds- 
men to look back to the Middle Ages for inspiration 
and guidance. They do this not as romanticists 
but in soberness and truth. 

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